AUDJPY has formed lower highs connected by a bearish trend channel on its hourly time frame, with price bouncing off support and gearing up for a test of resistance.

In addition, the Fibonacci retracement tool shows levels where sellers could be waiting. Price is already testing the 50% Fib at 94.65 and could be in for a larger pullback to the channel top that coincides with the 61.8% Fib and 100 SMA dynamic inflection point.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. In that case, AUDJPY could soon revisit the lows at 91.85 near the channel bottom if any of the Fibs hold as resistance.

Stochastic is moving up but already in the overbought zone to reflect exhaustion among buyers, so turning lower would confirm that bearish pressure is returning and that the downtrend is about to resume.

RSI has a bit more room to climb before reaching the overbought area, so the correction could keep going until that happens. A break above the 61.8% Fib and channel top, however, could suggest that a reversal may be in order.

AUDJPY found some support from risk-taking after Trump announced a one-month pause in auto industry tariffs, leading investors to ease up on trade war concerns for the time being. However, monetary policy differences between the RBA and BOJ could still come in play and allow the downtrend to resume.

Recall that the RBA recently cut interest rates and indicated scope for more easing, depending on how data turns out. The Australian GDP came in line with expectations of a 0.6% growth figure for the previous quarter.

Meanwhile, the BOJ seems inclined to carry on with its tightening cycle after already hiking interest rates back in January. Still, BOJ officials remain wary of uncertainties from trade policies.