The AUD/JPY experiences a modest rise, reaching a level around 94.85, marking its peak since mid-May. This increase is supported by a weaker Tokyo CPI, impacting the Japanese Yen, and a positive market sentiment favouring the Australian Dollar.

Currently trading near 94.60, the AUD/JPY remains up by less than 0.10% for the day. The Japanese Yen is pressured by expectations that the Bank of Japan will maintain its current interest rates due to the recent softer CPI data.

Technical Patterns Suggest Bullish Momentum

Technical patterns suggest a bullish momentum with the price movement forming a rectangle, indicating a possible consolidation phase. A breakthrough beyond the 94.80-94.85 range could indicate further gains, potentially aiming for a test of the 95.55 level.

Any potential pullback may present opportunities around the 94.00-93.95 range. On the contrary, a decisive move below this range could negate the positive outlook and push the cross down towards the 93.30 and further to the 93.00 mark.

The Japanese Yen shows varying strengths compared to major currencies, being strongest against the Swiss Franc. Such fluctuations underscore the dynamic nature of currency markets and the potential impact on related trading strategies.

In light of the recent movement in AUD/JPY, there’s a clear near-term lean towards upward momentum, largely propped up by shifting inflation markers out of Japan. The Tokyo Consumer Price Index came in softer than expected, which in turn seems to be reducing pressure on the Bank of Japan to tighten policy. This creates a rather narrow window where the Yen may continue to trade with a slight downside bias — not something we should ignore.

With the currency pair hovering just under the early-May highs, the rectangle shape forming on the chart usually signals one of two things: a pause before continuation or the beginning of reversal. Current price action still respects the upper edge of the 94.80-94.85 range, which acts as a zone of interest, not just in terms of resistance, but as a psychological area traders tend to watch carefully. If price manages to sustain above this level, there could be noise building up for a move towards the 95.55 handle. That’s the next visible congestion area, and one where we’d expect considerable two-way flow.

Market Sentiment and Potential Risks

On the other hand, if optimism fades or data from either side of the Pacific prompts re-evaluation, eyes would likely turn to the 94.00-93.95 region. That area previously functioned as a short-term base and would be a first zone where downside interest picks up. A clean break under that, particularly if accompanied by volume, raises the odds for a drop back into the 93.30 region, with spillover selling potentially aiming at 93.00 flat. Not immediately likely with what we’re seeing now, but we’re keeping it on the radar.

Kitco’s performance of the Yen against the Swiss Franc shows it hasn’t been uniformly weak — rather, it’s showing selectivity in its moves, which reflects nuanced risk sentiment across pairs. Movements like that suggest monetary expectations aren’t broad-brush across all JPY-linked instruments. It’s been more about diverging economic signals from co-players and how expectations settle in policy terms, especially now as central banks face very different starting points.

Technicals and macro both hint toward short-term topside preference, but recent gains have been modest. We need to see commitment through this upper consolidation band before fresh positioning becomes defensible.

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