FxWirePro: AUD/JPY extends weakness below 110-EMA, tests 23.6% Fib

AUD/JPY chart - Trading View 

Spot Analysis:

AUD/JPY was trading 0.15% lower on the day at 82.84 at around 08:55 GMT

Previous Week's High/ Low: 84.25/ 82.13

Previous Session's High/ Low: 83.72/ 82.96 

Fundamental Overview:

Mixed official Chinese PMIs fail to impress the antipodeans. China’s NBS Manufacturing and Non-Manufacturing PMIs cross market consensus but stayed below priors.

China’s NBS Manufacturing PMI rose past 50.8 forecast to 50.9 but lagged behind the 51.00 prior. 

Further, Non-Manufacturing PMI also stayed below 55.2 prior despite crossing 52.7 market consensus with 53.5 readings for June.

According to latest Reuters poll, the Reserve Bank of Australia (RBA) is likely to maintain the Official Cash Rate (OCR) at a record low of 0.1% for the seventh straight meeting next Tuesday.

Japan’s Industrial Production grew past market consensus and prior to 22.0% YoY in May.

Renewed Covid fears are weighing on the risky assets and sending a bid into the safe-haven assets.

Technical Analysis:

- AUD/JPY is extending weakness for the 3rd straight session

- Price action has broken below 110-EMA and is testing 23.6% Fib

- Volatility is rising as evidenced by widening Bollinger bands

- Bearish momentum and rising volatility to drive further weakness

Major Support and Resistance Levels:

Support - 82.81 (23.6% Fib), 82 (Psychological mark), 81.65 (110-month EMA)

Resistance - 83.04 (110-EMA), 83.50 (5-DMA), 84.74 (200-month MA)

Summary: AUD/JPY trades with a bearish bias. Price action was rejected at daily cloud and is on track for further downside. Bearish invalidation above daily cloud.