AUD/JPY has been stuck inside this consolidation pattern for a while, but it looks like a breakout is due.

On the hourly chart below, you can see that the pair has formed higher lows since the beginning of the month and has found resistance around the 92.00 mark to create an ascending triangle.

Which way could it go during Australia’s monthly CPI release?

AUD/JPY 1-hour Forex Chart by TV

Price just recently retreated from the triangle top and is now diving back below the pivot point (91.57) to set its sights on the bottom near the 91.00 handle.

Stronger selling pressure could spur a break below this support zone and set off a drop to the next potential floor at S1 (90.78).

A move below this area might be enough to confirm a bearish triangle break, which might then put AUD/JPY on a downtrend that’s at least the same height as the chart pattern.

That’d be close to 300 pips yo!

Technical indicators are looking mixed for now, with the moving averages oscillating to reflect sideways price action and Stochastic looking ready to pull up from the oversold region.

With these conflicting signals, AUD traders could take their cues from Australia’s upcoming inflation update instead.

Analysts are projecting a slight uptick in price pressures, which might take the year-over-year CPI reading up from 6.3% to 6.4%. However, it’s also worth noting that the past three releases have fallen short of estimates.

Also, the commodity prices report from ANZ reflected a sharp decline in April due to lower energy prices while the MI inflation index slowed from 0.3% to 0.2% in the same month.

In that case, weaker than expected official CPI data could mean another wave lower for AUD/JPY since this would likely seal the deal for a much longer RBA tightening pause.

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