Chart of the Week: AUD/JPY technicals and key inflation data

Financial markets face a pivotal week as inflation data takes center stage, with key releases from Australia, the United States, and Japan set to influence central bank policy trajectories. Investors will be closely scrutinizing Tuesday’s Australian CPI and Thursday’s US PCE readings for signs that persistent cost pressures may force a hawkish response from policymakers. The focus will then shift to Tokyo’s CPI on Friday, as the market seeks further indicators of Japan’s inflationary environment and its potential implications for monetary policy.

Please note that all release times are listed in EST; please check your local time zones accordingly.

The May CPI data, scheduled for release on Tuesday, June 23 at 21:30 EST, is highly anticipated, as it could signal a re-acceleration of inflationary pressures. According to Bloomberg’s economic calendar¹.

• CPI YoY: The market consensus expects annual inflation to tick up to 4.3%, up from the prior reading of 4.2%.
  
• CPI MoM: Monthly inflation is projected to drop to -0.4% compared to a prior 0.4%.
  
• Core measures: The Reserve Bank of Australia’s (RBA) preferred core metric, the CPI Trimmed mean YoY, is also expected to edge higher to 3.5% (from 3.4% prior), signaling that underlying inflation remains stubbornly sticky and above the RBA’s target 2–3% band.

On Wednesday, June 24, at 21:30, the focus shifts to Australia’s labor market dynamics for May. Following a weak prior month, a significant rebound is anticipated. According to Bloomberg’s economic calendar¹.

• Employment change: Forecasters are looking for a massive turnaround, with an expected addition of 30.3k jobs, recovering strongly from the prior contraction of -18.6k.
  
• Unemployment rate: Reflecting expected job growth, the unemployment rate is projected to tick down slightly to 4.4% from 4.5%.

This week’s inflation and the employment data are scheduled for release ahead of the RBA meeting minutes due on Monday of the following week. A strong jobs report alongside sticky inflation data may put pressure on the RBA to maintain a hawkish stance.

The upcoming release of the U.S. Personal Consumption Expenditures (PCE) price index for May—scheduled for Thursday, June 25—is set to be the week’s defining macroeconomic event, especially following a hawkish shift from the Federal Reserve under its new leadership. As the Fed’s preferred inflation gauge, the May report will be closely scrutinized to see whether underlying price pressures are entrenching.

Market forecasts¹ expect the Core PCE (which excludes food and energy) to rise around 0.3% to 0.35% month-on-month, keeping the annual core rate sticky at 3.3% to 3.4%. Meanwhile, headline PCE is projected to accelerate up to 4.0% or 4.1% annually, heavily driven by recent swings in energy costs. If the actual numbers meet or exceed these elevated forecasts, it will likely solidify hawkish expectations² and amplify market bets for a potential Federal Reserve interest rate hike as early as the July meeting.

Following the latest FOMC meeting and hawkish discussions, the updated CME FedWatch³ shows subtle shifts in conditional probabilities. For the upcoming July 29, 2026, meeting, expectations for the target rate remaining at 3.50%–3.75% have strengthened, rising to 63.7% (up from 59.4% previously), while the probability of an immediate jump to 3.75%–4.00% softened to 36.3%. Moving into September 2026, the 375–400 bracket holds the majority probability at 51.9%, but the odds for an even higher 400–425 bracket have trimmed slightly to 20.7% (down from 24.1%). Despite these minor short-term adjustments to the pacing of the tightening cycle, the broader macroeconomic trajectory remains firmly hawkish. By the December 9, 2026, meeting, the highest-probability target remains anchored in the elevated 4.00%–4.25% range with a 36.4% probability, confirming that the market still firmly anticipates two rate hikes to solidify before the end of the year.

As of early June, the Australian dollar has stabilized against the US dollar within a broad range around the 0.7000 handle following a multi-year decline from its historical peaks. June 12th report, including data up to June 9th, 2026:

• Dealer/Intermediary: Commercial dealers have sharply pivoted to a deeply net-short position, dropping past -100,000 contracts; however, a sharp move long can be seen as of mid-May 2026, as commercials continued to liquidate their short positions. It is important to note that this category is typically market makers, providing market participants with the ability to hedge against potential unfavorable market moves.
  
• Leveraged funds: Leveraged funds positioning remains net-long; however, a potential negative divergence may be in play as prices continue to make higher highs while position levels make lower highs.
  
• Asset Manager/Institutional:
  Similar to the leveraged funds category, after reaching all-time highs in 2026, a sharp reversal into short positions occurred as traders in this category continued to liquidate their long positions.

• AUD/JPY has been trading within an ascending Channel as marked by the green lines on the chart. As of April of 2025, price action continued to find support and resistance along the channel Border Lines throughout its trading journey.
  
• Four upward price gaps are identified within the ascending Channel. The first 3 can be considered runaway gaps, as price action resumed its uptrend; however, after the fourth Gap, price action has been trading sideways or in a range, as shown by the grey-sided rectangle on the daily chart. The potential exhaustion level (Gap 4) aligns with the start of the Middle East war.
  
• A minor negative Divergence can be identified within the sideways price action and the RSI indicator, as marked by the blue lines on the chart.
  
• A potential break below an intermediate trendline (Dashed red line) is marked by the small black circle on the chart. Following the break, price action attempted a double bottom, with the monthly PP level at 113.70 serving as its baseline and a major resistance level.
  
• Price action is trading around a confluence of converging technical indicators, within the monthly S1 range of 112.66 and the monthly PP of 113.70. the fast and intermediate moving averages EMA9, SMA9, and SMA21 converge around the weekly PP of 113.05.

In conclusion, the upcoming week may represent a critical juncture for the AUD/JPY pair as a cluster of high-impact macroeconomic data releases takes center stage. The highly anticipated Australian CPI and employment figures, combined with the vital US PCE report, will be instrumental in reshaping central bank monetary policy expectations for both the Reserve Bank of Australia and the Federal Reserve. Ultimately, how these fundamental catalysts interact with the prominent technical confluences and converging moving averages observed near key pivot points can be critical in determining the pair's next directional move.

Footnotes

1https://www.bloomberg.com/markets/economic-calendar
2www.marketpulse.com/markets/asia-open-wall-street-slumps-as-kevin-warsh-delivers-hawkish-hold-gbpusds-plunge-hits-support-ahead-of-boe/

3https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html