AUD/JPY Price Forecast: Positive view remains in place, overbought RSI warrants caution for bulls

• AUD/JPY strengthens to around 98.20 in Monday's early European session. 
• The cross keeps the bullish view, but the overbought RSI condition might cap its upside. 
• The immediate resistance level is seen at 98.50; the initial support level is located at 97.01. 

The AUD/JPY cross edges higher to near 98.20 during the early European session on Monday. The Japanese Yen (JPY) softens against the Australian Dollar (AUD) after Japan's Prime Minister Shigeru Ishiba announced his resignation. The latest political developments in Japan fueled uncertainty over the likely timing and the pace of interest rate hikes by the Bank of Japan (BoJ).

About the economic docket, the National Bureau of Statistics (NBS) showed Monday that China's Retail Sales rose 3.4% year-over-year (YoY) in August versus 3.7% prior. This figure came in worse than the expectation of 3.8%. Meanwhile, Industrial Production increased 5.2% YoY in the same period, compared to 5.7% in July, below the market consensus of 5.8%. However, the downbeat Chinese economic data fail to boost the China-proxy Aussie. 

Technically, the positive view of AUD/JPY remains in play as the cross is well-supported above the key 100-day Exponential Moving Average (EMA) on the daily chart. However, the 14-day Relative Strength Index (RSI) stands above the midline near 71.00, indicating the overbought RSI condition. This suggests that further consolidation or a temporary sell-off cannot be ruled out before positioning for any near-term AUD/JPY appreciation.

On the bright side, the key upside barrier for the cross emerges at 98.50, the upper boundary of the Bollinger Band. Further north, the next hurdle is seen at 99.17, the high of January 7. A decisive break above this level could pick up more momentum and aim for the 100.00 psychological level.

On the other hand, the initial support level for AUD/JPY is located at 97.01, the low of September 10. Any follow-through selling below this level could expose 96.31, the low of September 5. The additional downside filter to watch is 95.57, the 100-day EMA. 

AUD/JPY daily chart