FxWirePro: AUD/JPY hovers around 55-EMA support, break below to drive more weakness

AUD/JPY chart - Trading View 

Spot Analysis:

AUD/JPY was trading rangebound on the day at 80.54, with session high at 80.60 and low at 80.38

Previous Week's High/ Low: 81.51/ 80.45

Previous Session's High/ Low: 81.08/ 80.45

Fundamental Overview:

Poor China data and risk-off market sentiment are likely to keep upside in the pair limited ahead of crucial RBA policy meet.

A survey by Markit Economics showed on Monday that China's factory activity growth slipped sharply in July as demand contracted for the first time in over a year.

Caixin China Manufacturing PMI for July printed at 50.3, missing expectations at 51.1 and compared to 51.3 in June.

Focus now shifts to the Reserve Bank of Australia’s (RBA) monetary policy meeting due this Tuesday at 0430 GMT.

Analysts expect the RBA to stand pat amid resurging Delta covid strain woes. Further, falling iron ore prices add downside pressure.

Technical Analysis: Bias Bearish

- AUD/JPY is extending weakness below 200-DMA 

- 5-DMA has turned and is biased sharply lower

- Momentum is bearish, Stochs and RSI are sharply lower

- Volatility is high and rising as evidenced by widening Bollinger bands

Major Support and Resistance Levels:

Support - 80.37 (55-week EMA), Resistance - 81.37 (200-DMA)

Summary: AUD/JPY trades with a bearish bias. A dovish RBA on Tuesday could trigger further weakness. 

Watchout for decisive break below 55-week EMA for downside. Next bear target lies at 50% Fib retracement at 79.47. Bearish invalidation only above 200-DMA.