FxWirePro: AUD/JPY plunges over 3%, tests 50% Fib retracement, bias lower

Chart - Courtesy Trading View 

AUD/JPY was trading 3.73% lower on the day at 88.30 at around 05:40 GMT, outlook bearish.

The pair plunged lower after the Bank of Japan (BoJ) policy meeting which spooked markets about the possibility is eventual policy tightening.

Earlier on Tuesday, Bank of Japan (BOJ) kept the benchmark interest rate unchanged at -0.10% as expected, but widened the range for yield fluctuations in the benchmark government bonds.

The move lends credence to speculation that the BoJ could eventually tighten policy in the face of high inflation and Yen bulls cheer the Bank of Japan’s (BOJ) alteration to yield target.

The central bank said it will raise the range of 10-year Japanese Government Bond (JGB) yield fluctuations to between negative 0.5% and 0.5%, from a range of negative 0.25% to 0.25%. 

Focus going forward will be on  BOJ Governor Kuroda’s speech for fresh impulse. Hawkish BOJ concerns could further weigh on the prices.

On the other side, the People's Bank of China (PBOC) kept the one-Year Loan Prime Rate unchanged at 3.65%, as expected.

Also, the World Bank in the "World Bank China Economic Update - December 2022", reduced China's 2023 GDP forecast to 4.3% from 4.5%.

Aussie dampened amid poor China GDP forecasts and a sharp rally in the US Treasury yields.

Support levels - 88.01 (21-month EMA), 87.30 (May 2022 low), 85.07 (200-month MA)

Resistance levels - 90.53 (55-week EMA), 91.36 (5-DMA), 92.28 (200H MA)

Summary: AUD/JPY poised for more downside in the near-term. Major support lies at 200-month MA at 85.07. Breach below will major trend for the pair.