AUD/JPY Price Analysis: Refreshes two-month highs, near 94.40 on risk-on sentiment, weaker yen

• The AUD/JPY extends its weekly rally, up by 3.71%.
• Sentiment improved in the session, despite the economic backdrop, with investors’ fears about a possible global economic recession and a food crisis.
• AUD/JPY Price Forecast: Consolidates in the 94.00-40 range before pressuring the YTD high above 95.00.

The AUD/JPY advances nicely after reaching a daily low below the 93.00 mark, popping up to fresh six-week highs above the 94.00 figure, a level last seen on April 22, preparing for a re-test of the YTD highs. At 94.33, the AUD/JPY reflects an upbeat sentiment, with US equities finishing Thursday’s session with gains of 0.81% and 2.75%.

During the day, investors set aside the market’s actual narrative. Fears about a possible US recession, triggered by the US Federal Reserve tightening conditions, China’s coronavirus outbreak and factory halts, slowing supply chains, and the war between Ukraine – Russia remain as a backdrop in the global economic outlook.

Elsewhere, the Japanese yen remained under heavy selling pressure, posting substantial losses vs. its fellow counterparts. The AUD/JPY is refreshing two-month highs, and with the Relative Strength Index (RSI) in bullish territory and accelerating to the upside, the AUD/JPY threatens to break above the previous YTD high at 95.74.

AUD/JPY Price Forecast: Technical outlook

Therefore, the AUD/JPY bulls regained control after a cross-currency correction to 87.30 and, at the time of writing, are headed towards reaching a daily close near the 94.50 area. That’s from the daily chart perspective.

Zooming into the 4-hour chart, the AUD/JPY appears to lose steam. The Relative Strength Index (RSI) is well within the overbought territory at 83.35, so the cross-currency might consolidate in the 94.00-40 area as AUD/JPY takes a breather.

Upwards, the AUD/JPY ceiling level would be 95.00. Break above would expose the YTD high at 95.74, followed by the psychological 96.00 mark. On the downside, the AUD/JPY's first support would be the May 4 high at 94.02. Latter’s breach would send the AUD/JPY correcting towards 93.56, followed by 92.84.

Key Technical Levels