AUDJPY recently broke out of its descending channel to signal that a reversal from the downtrend is in order. Price is in the middle of a retest but already seems to have found support at the 38.2% level.

A larger correction could last until the 50% Fib that’s closer to the broken channel top. This is also near the 75.00 major psychological mark. The 61.8% level at 74.82 might be the line in the sand for a pullback, as a break below this could put AUDJPY back on its downtrend.

The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is still likely to regain traction from here. However, the gap between the indicators is narrowing to signal weakening selling pressure and a potential bullish crossover.

RSI is on the move down to show that selling pressure is in play, but the oscillator appears to be changing its mind halfway through to show that buyers are returning. Stochastic is also heading south to show that sellers have the upper hand, but the oscillator is closing in on the oversold region to reflect exhaustion soon. Turning back up could confirm that buyers are back in the game.

The RBA cut interest rates by 0.25% in their statement this week as expected, but this didn’t trigger much of a selloff for the Aussie. Many believe that this could be the central bank’s last easing move for the year and that the cuts could be enough to shore up economic performance in the remaining half.

Meanwhile, the yen is also under downside pressure on BOJ easing expectations as the central bank’s latest statement seemed more dovish than usual. Weak data from Japan could support this view and lend further bearish action for the yen.