03 Feb 2025

• AUD/JPY dives to a multi-month low in reaction to Trump’s new trade tariffs.
• Bets for a February RBA rate cut weigh on the Aussie and contribute to the fall.
• The bearish technical setup supports prospects for a further depreciating move
• The AUD/JPY currency pair is experiencing significant selling pressure at the beginning of the week, plunging to its lowest point since September 2024, approximately in the 94.70-94.65 range during the Asian trading session. Nevertheless, spot prices have managed to recover some of their intraday losses and are currently hovering around the 95.20 mark, reflecting a decline of 1.20% for the day.
  
  The imposition of tariffs by US President Donald Trump on imports from Canada, Mexico, and China has heightened fears of a global trade conflict. This development has dampened investors' enthusiasm for riskier assets, thereby enhancing the Japanese Yen's (JPY) appeal as a safe-haven currency in contrast to the more volatile Australian Dollar (AUD). Additionally, increasing expectations for a potential rate cut by the Reserve Bank of Australia (RBA) later this month further exacerbate the downward trend of the AUD/JPY pair.
  
  From a technical standpoint, the recent series of unsuccessful attempts to breach the 100-day Simple Moving Average (SMA) has resulted in the formation of multiple peaks on the daily chart. A subsequent decline below the horizontal support level of 96.00-95.90 reinforces the bearish outlook and indicates the likelihood of further losses. Furthermore, bearish indicators on the daily chart imply that the most probable direction for the AUD/JPY cross remains downward.
• It would be wise to await additional selling pressure below the daily low, specifically in the 94.70-94.65 range, prior to taking positions aimed at extending the existing downtrend that has persisted for over a week. Should this occur, the AUD/JPY cross may experience an intensified decline towards the 94.00 level, potentially leading to the September 2024 low, situated around 93.55-93.50.
  
  Conversely, the 95.65-95.70 range appears to present an immediate obstacle before reaching the 96.00 threshold. Should the price advance beyond the 96.25 resistance, it may present a selling opportunity, although there is a risk that such a move could lose momentum quickly before approaching the 97.00 level. This latter point is crucial; if surpassed, it could initiate a short-covering rally, propelling the AUD/JPY cross past the 97.20 resistance and towards the 97.55-97.60 horizontal resistance.