AUD/JPY flirts with 5-day tops as BOJ squashes tapering hopes

AUD/JPY builds onto yesterday’s recovery gains and now heads for a test of 87 handle amid yen’s relative weakness in response to latest BOJ headlines.

AUD/JPY tests Monday’s high at 86.63

The AUD/JPY pair rises +0.32% to 86.58, having found solid support just ahead of 10-DMA of 86.13. The cross mains strongly bid mainly driven by a solid rally in USD/JPY, as the yen slumped cross the board after the BOJ announced JGB-buying plans and increased bond purchases in the 5-10 year maturity range, which crushed markets’ expectations that the BOJ would hint at tapering at its next policy review meeting scheduled next week.

While lack-luster trading seen in AUD/USD offered little help to the yen cross. Looking ahead, the cross will get influenced by the RO-RO trends, as focus shifts to the US durable goods and GDP data due on the cards in the NA session.

Technical Levels

Higher side: 87.17 (Dec 16 high), 87.55 (daily R3)

Lower side: 86.13 (10-DMA), 85.81 (20-DMA)