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Forex: AUD/JPY closes lower as resistance at 102.50 continues to hold firm

FXstreet.com (Barcelona) - The AUD/JPY finished the session down 43 pips at 101.82. The pair has encountered firm resistance at 102.50 on numerous occasions which is the upper end of the recent trading range. All eyes will be on the economic data due out of Australia later this evening, including House Price Index, Trade Balance (both at 1:30GMT) and finally the RBA Rate Decision(4:30GMT).

According to Sean Callow of Westpac Global, “Market pricing flickering around 50/50 for the RBA decision today should ensure lively trade in AUD (2:30pm Syd/12:30pm Sing/HK). Only a handful of economists expect a 25bp cash rate cut today to 2.75% (with none of the big 4 local banks for a cut) but many now see the easing no later than June.

He went on to add, “The case for cutting today is essentially that Q1 CPI affirmed the existing “scope” to ease policy, growth remains clearly sub-trend with housing construction patchy and business confidence seems to have weakened further. Westpac doesn’t dispute the above but doubts the RBA was really waiting for the CPI release. Instead we believe it will be very keen to see the capex intentions survey on 30 May to judge whether there really is cause to be hopeful over investment once the mining cycle has peaked later this year.”

From a technical perspective, the pair is stuck in a range between 99.90 and 102.50 which will be the key levels to monitor going forward. Both short term moving averages and RSI (14) remain in neutral on the daily chart as neither side can generate enough follow through to create momentum buying/selling.

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