The Australian dollar/Japanese yen has reversed an early Asian corrective fall towards the weekly low.
Sellers remain optimistic despite a bearish RSI and trading below crucial SMAs.
The bears will find it difficult to break through 3.5-month-old horizontal support.
The AUD/JPY currency pair extends its fall from an intraday high, reversing early day gains, to revisit the 83.00 level on early Wednesday. As a result, the cross-currency pair reacts to the latest China PMIs for June while also directing SMA breakdowns toward key support.
China’s headline NBS Manufacturing PMI increased from 50.8 to 50.9, but fell short of the 51.00 prior reading in June, while the Non-Manufacturing PMI remained below 55.2, while crossing 52.7 market consensus with 53.5 readings.
Read more: Chinese PMIs beat expectations but fall short of expectations
Given the downward sloping RSI and the AUD/JPY pair’s continuous decline below the 50-day and 100-day SMA, the quote is poised to test horizontal support near 82.40, which it last tested in mid-February.
Even if the pair’s additional decline below 82.40 is hampered by potential oversold RSI conditions, the monthly low of 82.13 and the 82.00 round figure, not to mention the February 17 swing bottom at 81.75, would entice the bears.
Alternatively, the quote’s short-term recovery advances could be limited by the 100-day SMA at 83.95 and the latest swing high near 84.25, followed by a 50-day SMA level of 84.37.
It’s worth noting that a downward sloping trend line from May 10 near 84.50 becomes a critical upward hurdle during the AUD/JPY recovery, with a break sending bulls back to the monthly high of 85.20.
Expect further downside in the future.
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