• AUD/JPY trades at 94.93, buoyed by positive market sentiment and China’s PBoC rate cut but struggles to breach the 95.00 mark.
• Key resistance levels found at 95.00; the next resistance levels are at 95.85 and the psychological 96.00 mark.
• Downside risks emerge at the September 14 swing low of 94.50, potentially leading to a test of the Ichimoku Cloud and further supports at 94.30 and 93.92.

The AUD/JPY continues to push upwards, extending its rally to four consecutive days, as market sentiment improved, given speculation the United States (US) would achieve a soft landing. That, alongside China’s stimulus to its economy, as the PBoC cut rates 25 bps, would keep the Australian Dollar (AUD) underpinned, to the detriment of the safe-haven Japanese Yen (JPY). The cross-currency pair is exchanging hands at 94.93 early in Friday’s Asian session.

AUD/JPY extends its four-day rally, but faces a crucial test at the 95.00 level, with market sentiment and China’s rate cut in the backdrop

The daily chart suggests the pair halted its pullback from year-to-date (YTD) highs reached on June 19, with the pair retracing close to 500 pips, toward July’s low of 91.78, before climbing to current exchange rates. Nevertheless, the uptrend appears to have lost some steam, as it has remained trading sideways, unable to crack the 95.00 figure for the last month and a half.

To resume its uptrend, AUD/JPY buyers must reclaim 95.00, and once done, the path towards the YTD high would be more straightforward. Next, resistance levels would emerge at the July 25 swing high of 95.85, the psychological 96.00 mark, followed by the July 5 swing high at 96.83.

Conversely, if sellers stepped in and dragged prices towards the September 14 swing low of 94.50, that could pave the way to test the Ichimoku Cloud (Kumo). The following support would be the Tenkan-Sen line at 94.30, which once surpasses, the pair could break without entering the Kumo and dive towards the Kijun-Sen sitting beneath the latter at 93.92.

AUD/JPY Price Action – Daily chart

AUD/JPY Technical Levels