• AUD/JPY currently facing minor losses, standing strong at 97.45 after hitting a low of 96.85.
• The cross faced losses following the release of weak Australian Retail Sales figures from December.
• Bulls display resilience but the bears are slowly building momentum.

In Tuesday's session, the AUD/JPY pair was observed at the 97.45 level, recording mild losses but recovering from a low of 96.85 as the Aussie weakened following the release of soft Retail Sales figures. The broader outlook on the daily chart showcased bullish dominance, with the bulls determinedly holding their ground. Meanwhile, the four-hour chart indicated a rapid recovery by the buyers, reaffirming the prevalent bullish sentiment.

Weak December Retail Sales underscore sluggish Australian economic momentum, but markets still only discount a 10% chance of a 25 bps rate cut from the Reserve Bank of Australia (RBA) in February. Meanwhile, mixed labor market figures in Japan including falling unemployment rate and job-to-applicant ratio, gives little impetus for Bank of Japan (BoJ) to rush in pivoting its monetary policy, with market expectations suggesting a June liftoff.

AUD/JPY levels to watch

The indicators on the daily chart are indicating a subtle power of the bulls over the bears. The Relative Strength Index (RSI) is displaying neutrality, situated comfortably in a positive zone. The Moving Average Convergence Divergence (MACD) mirrors this sentiment, with green bars that remain static, neither rising nor falling. That being said, the market sentiment leans slightly in favor of the bulls due to the crosses's position against the Simple Moving Averages (SMAs). Hovering above the 20, 100, and 200-day SMAs, the AUD/JPY displays signs of bullish dominance on a grander scale.

AUD/JPY daily chart