AUD/JPY continues higher with daily resistance ahead as traders await UK PM confidence vote

• AUD/JPY awaits the outcome of the confidence vote of UK PM. 
• The RBA will be the next major events for the cross. 

At 94.83, AUD/JPY is higher on the day as risk sentiment largely stays on positive ground. The focus for the near term will also be on the Reserve Bank of Australia. AUD/JPY is 0.62% higher and has rallied from a low of 93.76 and has reached 94.99 the high of the day so far. 

There were no major economic data released Monday and AUD/JPY is aligned to the stock market which in recent trade has started to tail off, dragging the cross in a meanwhile correction to the downside with it. 

US stocks were drifting away from their earlier gains Monday that followed an overnight advance for Chinese technology stocks amid signs of easing regulatory scrutiny at home. The Dow Jones Industrial Average was fractionally higher, S&P 500 increased 11 points, or 0.27% and Nasdaq added 34 points or 0.38% by the time of writing. 

In other world markets, Japan's Nikkei closed 0.6% higher, Hong Kong's Hang Seng gained 2.7%, and China's Shanghai Composite added 1.3% higher. Meanwhile, Germany's DAX index added 1.3% and the FTSE 100 rose 1.0% ahead of a scheduled no-confidence vote later Monday by members of the ruling Conservative party in parliament on Boris Johnson's continued tenure as UK prime minister. Results are due at 9 pm London time, at the top of the hour. The outcome could make for volatility in forex and AUD/JPY tends to move lower at times of risk-off.

RBA in focus

Looking ahead, there will still be considerable tension around the RBA decision on Tuesday. Analysts at Westpac expect a ''40bp increase in the cash rate to 0.75%, but forecasters are very divided – about half expect 25bp and the rest are split between 40bp and a handful for 50bp. Market pricing is skittish around +30-35bp.''

''The wording of the statement will also be closely noted, though there will not be new forecasts until August,'' the analysts argued. ''The RBA Board is unlikely to have been very surprised by the Q1 GDP data. Growth of 0.8%qtr, 3.3%yr seems decent at first glance but the details showed reliance on inventory build-up and consumers running down savings. Westpac looks for better data in Q2 and Q3 2022 but overall, Australia’s economic outlook appears weaker, especially around housing construction. We have lowered our forecast for the 2022 GDP growth rate from 4.5% to 4.0%, and 2023 from 2.5% to 2.0%.''

AUD/JPY technical analysis

The price is meeting a key resistance and the breakout area is illustrated as being either above or below the support and reistsnace structures.