Australia just printed weaker-than-expected inflation data, dampening hopes of an RBA hike next month.
Could this trigger a triangle breakdown for AUD/JPY?
On the hourly timeframe below, you can see that the pair has formed lower tops and found support around 95.50, a minor psychological sign.
AUD/JPY for one hour Planned by TV
The pair is now testing the bottom of its descending triangle, and may be thinking of breaking down.
If that happens, the AUD/JPY might be selling at the same height as the chart pattern, which extends near 200 pips.
The nearby support levels at S1 (94.89) and S2 (93.86) could act as profit-taking points for the Australian dollar bulls.
However, the technical signals look mixed at the moment.
The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the support is more likely to break rather than hold.
However, stochastic appears ready to go up, so price may follow suit if bullish pressure, such as from risk flows, picks up again.
However, rallies may be capped around the triangle resistance, which aligns with the dynamic inflection points at the moving averages and the pivot point (96.28).
Remember, Australia just released its downbeat CPI report for May, with the annualized reading slipping from 6.8% to 5.6% instead of reaching the consensus of 6.1%.
This could be reason enough for the RBA to remain on standby during its July policy meeting, which is scheduled for next week. Above all, the possibility of BoJ intervention when USD/JPY hits 145-150 could be enough to keep the yen lower.
Do you think AUD/JPY will drop soon?
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