Further Downside Of The AUD/JPY Cross Pair Is Expected

• AUD/JPY renews seven-week low as China prints downbeat CPI, PPI for February.
• Convergence of two-month-old ascending trend line, 50% Fibonacci retracement challenge bears amid oversold RSI (14) line.
• Recover remains elusive unless crossing 91.75 hurdle; MACD teases buyers.

AUD/JPY sellers attack the short-term key support around 90.20 after China released downbeat inflation data early Thursday. Also weighing on the cross-currency pair are the headlines suggesting challenges to sentiment emanating from US President Joe Biden’s budget proposal for 2024, up for publishing on Friday.

As per the latest inflation data from the National Bureau of Statistics of China, the headline Consumer Price Index (CPI) dropped to 1.0% YoY versus 1.9% expected and 2.1% prior while the Producer Price Index (PPI) also declines to -1.4% from -0.8% previous readings and -1.3% market consensus.

Also read: China CPI in at 1.0% vs 1.9% expected, AUD unchanged

With the downbeat inflation numbers from Australia’s key customer China, as well as the risk-off mood, AUD/JPY bears poke a convergence of the two-month-old ascending trend line and 50% Fibonacci retracement level of the pair’s January-February upside, near 90.20.

It’s worth noting that the oversold RSI (14) joins the looming bull cross on the MACD to challenge the quote’s further downside. Also acting as an important nearby support is the 90.00 round figure.

Should the quote breaks the 90.00 mark, the odds of witnessing a slump toward the 61.8% Fibonacci retracement level surrounding 89.55, also known as the golden ratio, can’t be ruled out.

Meanwhile, AUD/JPY rebound needs validation from the 38.2% Fibonacci retracement level surrounding 90.90.

However, a convergence of the 200-SMA and a 12-day-old descending resistance line, around 91.75 at the latest, appears a tough nut to crack for the AUD/JPY buyers.

AUD/JPY: Four-hour chart

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Trend: Further downside expected