FxWirePro: AUD/JPY erases early gains, bearish RSI divergence keeps scope for further downside

AUD/JPY chart - Trading View 

Technical Analysis:

AUD/JPY was trading 0.06% higher on the day at 84.76 at around 11:00 GMT.

The pair has erased early gains, slipping lower from session highs at 85.05.

Bearish RSI divergence from price action on the daily charts keeps scope for further downside.

200-month MA is proving stiff resistance to crack, decisive break above required for further gains.

50-DMA and then daily cloud offer strong support, break below will drag the pair lower.

Fundamental Overview:

The Reserve Bank of Australia (RBA) kept its cash rate at a record low of 0.1% in its June meeting as widely expected.

The policymakers reaffirmed their commitment to stick with highly accommodative conditions until at least 2024.

The RBA noted that its future course of monetary policy would be based on the actual inflation when it is within the 2% to 3% target.

The Japanese yen remained on the backfoot after the Organisation for Economic Cooperation and Development (OECD) cut the economic outlook echoing policymakers' similar concerns.

Support levels - 84.72 (5-DMA), 84.19 (50-DMA), 83.69 (Cloud top)

Resistance levels - 84.75 (200-month MA), 85.29 (Upper BB), 86.83 (88.6% Fib)

Summary: AUD/JPY may see some weakness on account of bearish RSI divergence. Major trend is still bullish, but stiff resistance is seen at 200-month MA. Decisive break above will fuel further upside. On the flipside, break below daily cloud will change near-term dynamics.