AUD/JPY Price Analysis: Retreats from weekly highs towards 92.50s on risk-off mood

• The AUD/JPY paired Wednesday’s gains and retreated from weekly highs amidst a 1.14% loss.
• The central bank’s tightening and China’s lockdowns could slow down the global economy.
• AUD/JPY Price Forecast: Upward biased, though a wall of solid resistance lies around 94.00.

The AUD/JPY slumps from weekly highs after the US central bank decided to lift rates on Wednesday, triggering a risk-on market mood, which boosted risk-sensitive currencies like the AUD, the NZD, and the CAD. Nevertheless, on Thursday, a violent shift in sentiment witnessed flows towards safe-haven peers, ultimately favoring the Japanese yen. At the time of writing, the AUD/JPY is trading at 92.58.

US equities finished Thursday’s session with huge losses, between 3.12% and 4.99%. Rate increases by the Federal Reserve on Wednesday, and the Bank of England on Thursday, dented appetite for riskier assets. At the same time, both central banks acknowledged China’s lockdowns, adding that it might disrupt supply chains and spur high inflationary pressures.

On Thursday, the AUD/JPY opened around Wednesday highs around 93.70, and in the Asian session, it probed the 94.00 mark. Nevertheless, as sentiment shifted, the AUD/JPY broke the market structure lows around 93.33 in the hourly chart and accelerated towards Wednesday’s daily lows around 92.26.

AUD/JPY Price Forecast: Technical outlook

The AUD/JPY daily chart shows the pair is in an uptrend. The daily moving averages (DMAs) below the spot price aim high. However, it is worth noting that the 50-DMA confluences with the April 27 swing low, each around 90.25 and 90.43 respectively, meaning that a negative shift in sentiment could send the AUD/JPY tumbling towards the 50-DMA. Nevertheless, unless that scenario plays out, the AUD/JPY is upward biased.

That said, the AUD/JPY first resistance would be 93.00. A breach of the latter would expose the May 4 daily high at 93.82, followed by the March 28 daily high at 94.32 and then the YTD high at 95.74.