AUD/JPY Price Forecast: Fails Near Descending Channel Resistance, Around Mid-96.00s

Forex

Summary:

The AUD/JPY cross builds on the previous day's late bounce from the 95.35-95.30 area, or over a one-week low, and gains strong positive traction during the Asian session on Friday.

AUD/JPY gains positive traction amid the emergence of heavy JPY selling on Friday.

The intraday momentum stalls near the top end of a one-week-old descending channel.

A sustained strength beyond the said barrier should pave the way for additional gains.

The AUD/JPY cross builds on the previous day's late bounce from the 95.35-95.30 area, or over a one-week low, and gains strong positive traction during the Asian session on Friday. Spot prices, however, struggle to capitalize on the move beyond mid-96.00 and retreat to the 96.15 region in the last hour, still up for the first time in three days.

The Japanese Yen (JPY) weakened after Bank of Japan (BoJ) Governor Kazuo Ueda signaled a potential bond market intervention to curb any further rise in the Japanese government bond (JGB) yields. Apart from this, the Reserve Bank of Australia's (RBA) cautious rate cut earlier this week continues to underpin the Aussie and offers additional support to the AUD/JPY cross. That said, expectations of continued BoJ rate hikes, bolstered by Japan's strong National CPI, help limit the JPY losses and cap the currency pair.

From a technical perspective, the sharp intraday move-up stalls near a resistance marked by the top end of over a one-week-old descending trend channel. The said barrier is pegged near the 96.45-96.50 area and should now act as a pivotal point. Some follow-through buying could lift the AUD/JPY cross to the 200 period Simple Moving Average (SMA) on the 4-hour chart, around the 97.00 neighborhood. This is followed by last week's swing high, around the 97.30-97.35 area, which if cleared should pave the way for additional gains.

The AUD/JPY cross might then resume its recent goodish recovery move from the lowest level since September 2024 touched earlier this month and aim towards reclaiming the 98.00 mark. The momentum could extend further towards the next relevant hurdle near the mid-98.00s en route to the 98.75-98.80 supply zone and year-to-date peak, around the 99.10-99.15 region touched in January.

On the flip side, the 95.70 area now seems to protect the immediate downside ahead of the overnight swing low, around the 95.35-95.30 region, and the 95.00 psychological mark. A convincing break below the latter would be seen as a fresh trigger for bearish traders and make the AUD/JPY cross vulnerable to retesting the multi-month low, around the 94.40-94.35 region before dropping to the 94.00 round-figure mark.

AUD/JPY 4-hour chart

Source: FXSTREET

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FED

Remarks of Officials

"My view is, before we got to the uncertainties from policy and from geopolitics and from some others, the overall thing (inflation) looked pretty good to me," Austan Goolsbee, Chicago Federal Reserve President, said. The Labor Department reported a larger-than-expected 0.5% month-over-month increase in CPI for January. The year-on-year figure also climbed back to 3% for the first time since June, having risen each month since September. The comparable Personal Consumption Expenditures Price Index the Fed uses for its 2% inflation target is due to be released next week, and most economists estimate it will show less of an increase than reflected in the CPI.

In his discussion about the labor market, Goolsbee described it as "epically strong." He suggested that the job market remains robust despite uncertainties around immigration policy. Over half of the labor force in the past decade has been composed of new workers, many of whom are likely immigrants.

President Trump has recently proposed or implemented a series of tariffs. Last week, Trump announced a 25% tariff on steel and aluminum imports and plans to impose "reciprocal tariffs" on other countries. Additionally, there are considerations for tariffs on automobiles, semiconductors, pharmaceuticals, and lumber this week. Goolsbee expressed concern about the potential for these large-scale tariffs to cause a significant supply shock, which could exacerbate inflation, similar to the effects seen during the COVID-19 pandemic.

The tariffs imposed during Trump's first term as president did not have a material impact on inflation, Goolsbee said, in part because they were narrower and included enough exemptions that supply networks were not affected. But in thinking about the more broad-based and higher tariffs currently in development by Trump," it depends on how many countries they are going to apply to and how big are they going to be. And the more it looks like a COVID-sized shock, the more nervous you should be about that."

Goolsbee said it's important to remember that great progress has been made in bringing inflation down from the four-decade highs reached in 2022, but the level of uncertainty around the economy and the evolving policies of the new Trump administration around tariffs may be having an impact. If tariffs raise prices, the Fed has to think about it.

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Justin

Economic

China’s distressed developers are increasingly asking local courts to drive their restructuring efforts, as weak home sales continue to weaken their ability to make headway or deliver on private debt workout plans.

Chongqing Casin Property Development Group Co late last month became the newest among its peers to apply for the court to overhaul its debt. The move followed a Bloomberg News’ report that defaulter China Fortune Land Development Co is considering scrapping a creditor-approved debt plan for a court-led solution.

Meantime, Jinke Property Group Co, the country’s first high-profile, listed delinquent builder to pursue this option, started a creditor vote on its relevant restructuring proposal earlier this week. The vote will end on March 31.

The expanding list of Chinese developers seeking the court’s help is the latest sign of stress in a property debt crisis that’s entering its fifth year, as private debt talks become protracted and existing restructuring efforts suffer setbacks. While a court-driven process does present an alternative path for distressed firms, its success hinges on key factors including the introduction of cash-rich new investors.

“Court-led restructuring is the last resort for distressed companies,” said Qian Wenhan, a partner of Zhong Yin Law Firm, who specialises in restructuring and bankruptcies. “As China’s housing market has yet to notably stabilise, and some companies’ debt negotiations become lengthy or even hit an impasse, more developers are expected to use this approach to solve their predicament.”

The trend is also evident across industries as a slowdown in the world’s second-largest economy takes its toll. The number of Chinese listed companies seeking court-led restructuring rose to a six-year high of 29 last year, according to a report by Shanghai-based AllBright Law Offices. Nearly a quarter of them were from real estate or construction firms, it shows.

Court-supervised restructuring for developers in China remains a novelty, despite a record wave of defaults in the industry over recent years. Such an approach generally requires a procedure to place the company under bankruptcy administration, and may include white knights to bring in new funds.

A growing number of Chinese developers also have ended up in court in Hong Kong since the crisis began, although it was predominantly the offshore creditors that applied to liquidate the defaulters’ business. At least seven such builders, including former industry behemoth China Evergrande Group, has received the court’s so-called winding-up rulings.

To be sure, whether a local court will agree to drive a company’s restructuring depends on key conditions such as securing strategic investors who can inject new life into the debt-laden firm, lawyers and analysts say.

While the sample pool in China remains too small to meaningfully analyse the impact of court-led restructuring on creditors and investors, the prolonged nature of the debt crisis has lowered the expectations for some.

“Holders of public bonds can otherwise only live to see corporate assets depreciate over time,” said Ma Suiqing, a senior partner and fixed income investment director at Tensor Pacific Co, a Hangzhou-based hedge fund. “That’s why court-led restructuring of developers is clearly beneficial to most bondholders, as it at least offers some level of transparency and fairness.”

Source: Theedgemarkets

To stay updated on all economic events of today, please check out our Economic calendar

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FED

Remarks of Officials

The overall picture is that the U.S. economy remains on a firm footing, with output growing at a solid pace. Real gross domestic product grew 2.5 percent in 2024. Consumer spending continued to drive this solid pace last year. While retail sales posted a decline last month, January data are often difficult to interpret. Bad weather and seasonal adjustment difficulties may have affected the release, and it should be noted the slowdown came after a strong pace of sales in the second half of last year.

Inflation has fallen significantly since its peak in the middle of 2022, though the path continues to be bumpy and inflation remains somewhat elevated. Readings last week from the BLS showed price pressures persisted in the economy in January. Based on the consumer price index and producer price index data for January, it is estimated that the PCE index advanced about 2.4 percent on a 12-month basis in January. Excluding food and energy costs, core prices are estimated to have risen 2.6 percent. Those readings show there is still some way to go before achieving the FOMC's 2 percent objective.

Employment readings show that the labor market is healthy and stable. Payroll job gains have been solid recently, averaging 189,000 per month over the past four months, according to the Bureau of Labor Statistics (BLS). After touching 4.2 percent as recently as November, the unemployment rate has flattened to 4 percent since then, consistent with a labor market that is neither weakening nor showing signs of overheating.

Governor Kugler noted that while downside risks to employment have diminished, upside risks to inflation remain. Additionally, the potential net effects of new economic policies are still highly uncertain. Therefore, it is appropriate for the Federal Reserve to maintain the federal funds rate target range at 4.25% to 4.50%.

Overall, the net impact of new economic policies remains uncertain, and the future path of interest rates will depend on specific developments. Given the current balance of risks, it is appropriate to keep the federal funds rate unchanged for a period of time.

Fed Governor Kugler

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Alex

Forex

EUR/USD could lose ground amid a potential bearish reversal as the pair trading within a rising wedge pattern.

The downward correction would be indicated if the 14-day RSI surpasses the 70 mark.

The pair may test its primary support level at the nine-day EMA of 1.0453.

The EUR/USD pair edges lower after gaining some good profits in the previous session, trading around 1.0500 during the Asian session on Friday. A closer examination of the daily chart indicates a potential bearish reversal as the pair trading within a rising wedge pattern, indicating the declining volume as the pattern develops, signaling weakening buying pressure for the pair.

However, the 14-day Relative Strength Index (RSI), a key momentum indicator, is hovering near 60, indicating continued bullish support for the EUR/USD pair. A move beyond the 70 level would signal overbought conditions, potentially leading to a downward correction. Additionally, the pair remains above both the nine-day and 14-day Exponential Moving Averages (EMAs), reinforcing strong short-term momentum.

On the upside, the EUR/USD pair could face initial resistance at the upper boundary of the rising wedge at 1.0540. A breakout above the wedge would reinforce the bullish bias and support the pair to test the two-month high of 1.0630, reached on December 6.

The EUR/USD pair is expected to test its key support level at the nine-day EMA of 1.0453, followed by the 14-day EMA at 1.0436, which aligns with the lower boundary of the rising wedge. A decisive break below this crucial support zone could trigger a bearish bias, increasing downward pressure on the pair and potentially driving it toward the 1.0177 level—the lowest since November 2022, last recorded on January 1.

EUR/USD: Daily Chart

Euro PRICE Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.07%	0.09%	0.50%	0.03%	0.14%	0.00%	0.07%
EUR	-0.07%		0.01%	0.44%	-0.04%	0.07%	-0.07%	-0.00%
GBP	-0.09%	-0.01%		0.42%	-0.05%	0.05%	-0.09%	-0.02%
JPY	-0.50%	-0.44%	-0.42%		-0.43%	-0.34%	-0.49%	-0.42%
CAD	-0.03%	0.04%	0.05%	0.43%		0.10%	-0.03%	0.03%
AUD	-0.14%	-0.07%	-0.05%	0.34%	-0.10%		-0.14%	-0.08%
NZD	-0.00%	0.07%	0.09%	0.49%	0.03%	0.14%		0.07%
CHF	-0.07%	0.00%	0.02%	0.42%	-0.03%	0.08%	-0.07%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

Source: FXSTREET

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ING

Economic

Core inflation accelerated faster than expected in January, while Japan’s service-led recovery continued. The Bank of Japan (BoJ) is expected to deliver a 25 bp rate hike in May, though a sharp rise in the JPY complicates the economic outlook.

Fresh food prices propelled inflation higher in January

Japan’s consumer price inflation accelerated to 4.0% year on year in January, in line with market consensus (vs 3.6% in December), as fresh food surged 21.9% (vs 17.3% in December). Rice prices skyrocketed 70.9%. Excluding fresh food, core CPI rose faster than expected to 3.2% (vs 3.0% in December, 3.1% market consensus). Costs of eating out have been on the rise for the past three months. Inflation rose 0.5% month on month, seasonally-adjusted, with goods up 1.0% and service costs unchanged. We believe that the BoJ is likely to focus on core trends rather than headline inflation. Though in line with BoJ projections, price dynamics support the central bank’s rate normalization strategy.

JPY rising as market expectations for a rate hike increase

A variety of factors have market expectations pivoting toward rate hikes: recent hawkish comments from BoJ officials; stronger-than-expected GDP data; and a rising CPI. As such, 10Y Japanese government bond (JGB) yields rose significantly, while the JPY surged against the USD over the past week.

We believe that the BoJ prefers to avoid any sudden moves in market rates, as the currency reaction could dampen economic sentiment and activity. A sudden jump in long-term yields would increase uncertainty about corporate and government funding. Sharp JPY appreciation may hurt earnings. So, the BoJ will try to limit the extremes of market reactions. This morning, Governor Ueda told parliament that the BoJ will keep JGB buying operations flexible. Trading in the JPY and JGBs seemed to calm down somewhat after his remarks.

Flash PMIs advanced in February

Japan’s flash purchasing managers indexes showed services are helping to drive the economic recovery, while manufacturing remains sluggish. Overall, both indices improved from the previous month. The service PMI rose to 53.1 in February from 53 in January, marking the fourth consecutive month of expansion. The manufacturing PMI edged up to 48.9 from 48.7, but has remained in contractionary territory for eight months. Output and new orders were up. We are concerned that US tariffs will eventually dampen the economy. But so far, the negative impact hasn't materialised.

Inflation outlook uncertain

Tokyo inflation data, due out next week, is expected to ease modestly in February. Food prices are likely to rise further, but renewed energy subsidy programmes should offset some gains. We also believe the government is likely to introduce measures to stabilise rice prices, which could tame broader food costs. Yet with Trump's tariff policies intensifying, the BoJ will remain quite cautious going forward.

Core inflation is likely to stay above 2% for a considerable time, which allows the terminal rate to reach 1.25% by 2026

Japanese Inflation Accelerates, Raising Odds of Another Rate Hike_1

To stay updated on all economic events of today, please check out our Economic calendar

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Cohen

Forex

USD/CAD remains steady as the US Dollar faces challenges due to improved market sentiment.

US Initial Jobless Claims increased to 219,000 in the previous week, surpassing the expected 215,000.

The Bank of Canada may rethink to cut rates amid elevated inflation in Canada.

USD/CAD moves little after registering losses in the previous session, trading around 1.4170 during the Asian hours on Friday. The pair lost ground as the US Dollar (USD) struggled amid weak jobless claims data and mixed signals from the Federal Reserve (Fed). Traders will keep an eye on the preliminary reading of the US S&P Global Purchasing Managers Index (PMI) for February, which is due later on Friday.

US Initial Jobless Claims for the week ending February 14 increased to 219,000, surpassing the expected 215,000. Continuing Jobless Claims also rose slightly to 1.869 million, just under the forecast of 1.87 million.

Fed Governor Adriana Kugler noted on Thursday that US inflation still has "some way to go" before reaching the 2% target, acknowledging uncertainty ahead, according to Reuters. Meanwhile, St. Louis Fed President Alberto Musalem highlighted the potential risks of stagflation and rising inflation expectations.

The US Dollar Index (DXY), which measures the USD against six major currencies, gained ground near 106.50 at the time of writing. However, the DXY faced challenges amid improved market sentiment after US President Donald Trump announced potential progress in trade negotiations with China, easing market concerns over tariffs.

However, US President Donald Trump announced plans to impose import tariffs on lumber and forest products next month, which could weigh on the Canadian Dollar (CAD) as Canada remains a leading global producer and exporter.

Meanwhile, the Bank of Canada (BoC) may rethink cutting rates following the release of January’s CPI data, which showed elevated inflation in Canada. Traders will be closely watching Friday’s Canadian Retail Sales report and a speech by BoC Governor Tiff Macklem for further policy signals.

Source: FXSTREET

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AUD/JPY Price Forecast: Fails Near Descending Channel Resistance, Around Mid-96.00s

Source: FXSTREET

Fed's Goolsbee: PCE Inflation Set to Trail CPI

Chinese Courts Asked To Lead Debt Talks For Distressed BuildersChinese Courts Asked to Lead Debt Talks for Distressed Builders

Source: Theedgemarkets

Fed Governor Kugler: Inflation Faces Upside Risks; Policy Rate to Remain on Hold

EUR/USD Price Analysis: Remains Subdued Near 1.0500 Within a Rising Wedge Pattern

Source: FXSTREET

Japanese Inflation Accelerates, Raising Odds of Another Rate Hike

Fresh food prices propelled inflation higher in January

JPY rising as market expectations for a rate hike increase

Flash PMIs advanced in February

Inflation outlook uncertain

Core inflation is likely to stay above 2% for a considerable time, which allows the terminal rate to reach 1.25% by 2026

USD/CAD Treads Water Above 1.4150 Ahead of US PMI Data

Source: FXSTREET

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