AUD/JPY drops below 50% Fib ahead of Aussie retail sales release

The AUD/JPY pair closed below 82.48 (50% Fib R of Nov 9 low - Feb 16 high) on Wednesday as the Japanese Yen outperformed other majors amid broad based USD weakness due to moderate losses on the Wall Street.

Eyes Aussie retail sales

Australia’s April retail sales due for release later this morning are expected to show a rebound in spending (expected 0.3%, previous -0.1%).

In March, sales slumped by 0.1% in seasonally-adjusted terms. The poor showing was partly blamed on disruptions caused by Cyclone Debbie. However, the bigger picture is not encouraging as well.

Retail trade growth in Australia has softened over the past two years. This is because the demand for discretionary/non-food items has dropped due to weak household income growth.

A weaker-than-expected print today would only heighten fears about the health of household balance sheets and force investors to abandon the Aussie long positions. The data will be released at 1:30 GMT along with a private capital expenditure figure for the first quarter. A pick up in Capex would be good news for AUD bulls.

AUD/JPY Technical Levels

The pair was last seen trading around 82.40. A break above 82.48 (50% Fib R) would open up upside towards 82.95 (previous day’s high) and 83.45 (May 10 low). On the downside, breach of support at 82.11 (previous day’s low) could yield a sell-off to 81.77 (May 18 low) and 81.49 (Apr 19 low).

The daily MACD has turned bearish and the RSI too is hovering below 50.00, in the bearish territory. The price chart also shows a falling top formation.