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  • AUD/JPY fails to keep the bounce off 74.47 after downbeat China inflation data.
  • One-week-old horizontal area offers immediate rest ahead of monthly support line.
  • Bulls will look for a clear break above the weekly high to aim for March 2019 low.

AUD/JPY drops to 74.73, currently around 74.93, following weaker than forecast CPI and PPI data from China, published during Wednesday’s Asian session. Even so, one-week-old horizontal support restricts the pair’s immediate downside.

China’s Consumer Price Index (CPI) for May slipped below 2.7% YoY and -0.5% MoM forecasts to 2.4% and -0.8% respectively.

Read: China data dump unimpressive: May CPI +2.4 pct vs +2.7 pct YoY, PPI -3.7 PCT vs -3.3 PCT YoY

In addition to the downbeat data from Australia’s largest customer, bearish MACD also portrays the pair’s weakness. As a result, the quote’s downside break of 74.50/40 support area could fetch it to an ascending trend line from May 17, at 73.75 now.

If at all the bears occupy the driver’s seat after 73.75, May 27 tops near 71.93 could return to the charts.

Alternatively, 75.75 and the recent high surrounding 76.80 could keep the buyers chained for the short-term. However, an upside clearance of 76.80 will propel the AUD/JPY prices towards March-2019 lows near 77.50/55.

AUD/JPY four-hour chart

Trend: Pullback expected

 

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