AUD/JPY fell for a third day and traded near 113.20 in Asian hours on Monday. Price is testing the lower trendline of an ascending triangle near 113.00, and a sustained break below it would point to a bearish pattern failure.
The pair still sits above the 50-day EMA, keeping a mildly bullish near-term bias. It is consolidating between resistance at the nine-day EMA and support from the longer EMA, while the 14-day RSI is near 50.
If price rebounds, it may move towards the nine-day EMA at 113.72. A break above that level could open a retest of the all-time high at 114.74, with the triangle top near 115.00.
If the triangle breaks lower, the next level is the 50-day EMA at 112.44. Further weakness could bring focus to the three-month low at 108.79, set on March 31.
The technical analysis was produced with help from an AI tool.
We see the AUD/JPY cross at a critical point, testing the support of a long-term ascending triangle around 113.00. The neutral RSI reading indicates market indecision, so we are watching for a decisive break. This setup presents clear opportunities for option traders on either side of the move.
For those anticipating a breakdown, fundamental factors lend support to this view. Recent data showed Australian retail sales for April came in flat, and iron ore prices have softened to $115 per tonne, weighing on the Aussie. A sustained move below the 113.00 trendline could be a trigger to buy put options, targeting the 50-day EMA around 112.44 as a first step.
Conversely, if support holds, a rebound is very possible. The Reserve Bank of Australia has maintained a hawkish stance compared to other central banks, holding its cash rate at 4.85% in its early May meeting. A bounce from this level could see traders purchase call options, with a break above the nine-day EMA at 113.72 signaling a potential retest of the 115.00 resistance.
The bigger picture involves policy divergence between Australia and Japan. The Bank of Japan is hinting at another potential rate hike in June after Tokyo’s core inflation last week printed a stubborn 2.9%. We recall the significant central bank intervention we saw back in late 2024 and early 2025, a risk that remains on the table if the yen weakens too quickly.
Given the current indecision, implied volatility is moderate, which could make strategies like long straddles appealing. This would allow traders to profit from a significant price move in either direction, which seems likely given the fundamental pressures. We are closely watching the upcoming Australian wage price index data for the next catalyst.
