Downward Correction Develops After Rejecting the Upside Wall Again

Central Bank

Economic

Summary:

The price turned downward from this zone and recently completed a clean breakout below the local support level of 113.31.

SELL AUDJPY

EXP

PENDING

113.270

Entry Price

108.900

114.700

112.958 +0.122 +0.11%

Pips

PENDING

108.900

Exit Price

113.270

Entry Price

114.700

In Australia, RBA Governor Michele Bullock emphasized on Thursday that the central bank remains strictly focused on curbing inflation, following three interest rate hikes earlier this year that pushed the cash rate to 4.35%. Bullock added that inflation is too high and that the board will do what is necessary to fulfill its mandate of delivering price stability and full employment. This comes even though the Australian economy showed clear signs of slowing down during the first quarter of the year. According to data published on Wednesday by the Australian Bureau of Statistics, Gross Domestic Product (GDP) grew at an annual rate of 2.5%, coming in below the 2.6% recorded in the same period a year earlier and missing the market expectation of a 2.7% expansion. On a quarter-over-quarter basis, economic activity increased by just 0.3%, falling short of the projected 0.5% forecast and moderating significantly from the 0.8% growth rate observed in the previous quarter.

Business activity indicators also highlighted this loss of momentum across the private sector. The S&P Global Services PMI fell to 48.7 in May, down from its previous level of 50.7, though it managed to beat the initial market estimate of 47.7. Similarly, the Composite PMI was revised upward to 48.7 from a lower preliminary reading, landing above the general consensus of 47.8. Despite these positive updates, both metrics remain below the neutral 50-point threshold, pointing to a continued contraction in private sector business conditions.

On the other hand, the Japanese Yen has been under downward pressure due to a combination of comparatively low Japanese Government Bond (JGB) yields and ongoing concerns regarding the economy's vulnerability to high crude oil prices. This movement comes despite hawkish comments from Bank of Japan (BoJ) Governor Kazuho Ueda, who firmly placed inflation at the center of the central bank's monetary policy goals. Adding to this stance, Japanese Finance Minister Satsuki Katayama stated on Friday that financial authorities remain continuously prepared to take appropriate actions in the foreign exchange market whenever it becomes necessary. Meanwhile, Japan's economy grew by 0.5% during the first quarter, beating market consensus estimates and strengthening bets that the Bank of Japan will proceed with an interest rate hike at its upcoming policy meeting scheduled for June 15-16. Downward Correction Develops After Rejecting the Upside Wall Again_1

Downward Correction Develops After Rejecting the Upside Wall Again_1

Technical Analysis

From a chart perspective, AUD/JPY faced selling pressure a few days ago when it encountered the horizontal resistance ceiling at 114.73. The price turned downward from this zone and recently completed a clean breakout below the local support level of 113.31. This new downward break has the potential to increase the speed of the decline toward the 108.90 area, developing as a broader corrective move toward the next important horizontal support floor. Meanwhile, the 100 and 200-period Moving Averages are currently tracking at 111.56 and 106.14, respectively. These lines are expected to offer reliable dynamic support to the price action as it moves closer to those areas.

A review of the momentum oscillators provides further cross-verification for this developing downward move. The Relative Strength Index (RSI) was unable to break past the 63 level, which has acted as a clear peak for the index during recent upside attempts. It has since turned downward to sit at the 42 level, pointing to growing bearish momentum and leaving plenty of open chart space to accommodate the active correction.

At the same time, the MACD indicator is printing a negative histogram that is starting to gain downward depth, while its signal lines are heading quickly toward the neutral zero line. A clean breakdown of these lines into the negative quadrant would add more weight to the sell-side move. Given the technical signals currently appearing on the chart, the downward direction stands as the path of least resistance for the pair.

Trading Recommendations

Trading direction: Sell

Entry price: 113.27

Target price: 108.90

Stop loss: 114.70

Validity: Jun 19, 2026 15:00:00

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Downward Correction Develops After Rejecting the Upside Wall Again

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