AUDJPY has formed lower highs connected by a falling trend line, and price is currently testing this resistance level. If it holds, the pair could resume the drop to the swing low or lower.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that resistance is more likely to hold than to break. The 200 SMA lines up with the trend line to add to its strength as resistance around the 81.50 minor psychological mark.

However, price is above the 100 SMA as an early indicator of bullish pressure. A break past the consolidation highs around 81.75 could signal a reversal from the selloff.

Stochastic has a bit of room to climb before reflecting overbought conditions or exhaustion among buyers, so the pair might keep advancing. Still, the oscillator is nearing the overdone level to signal that sellers could take over then.

RSI is already on the move down to suggest that bearish momentum is in play. A break below the consolidation above the 81.00 handle could confirm that the downtrend is resuming back to the lows at 80.00 or lower.

Risk-off flows might be enough to draw traders away from the higher-yielding AUD onto the safe-haven yen. Concerns about the Delta variant spread have been strong, as this has led some cities to reinstate lockdown restrictions.

In particular, Australia’s Victoria state has been in lockdown mode for weeks, likely delaying the economy’s return to pre-pandemic levels. This could also discourage RBA policymakers from tightening anytime soon, possibly leading them to rethink their recent stimulus tapering efforts.

Meanwhile, the Tokyo Olympics remain a concern for the Japanese economy, as this has led to some new reported cases among delegates. Still, the yen typically gains from a flight to safety, even if risks remain in Japan.