AUD/JPY reversely sharply on RBA jawboning, eyes on 88.00

The cross in AUD/JPY stalled its recovery path just shy of 88.50 levels and came under aggressively selling pressure on the announcement of the RBA’s monetary policy decision.

AUD/JPY back below 5-DMA at 88.31

The spot returned to the familiar region near 88.20, with the bears now fighting for control amid fresh AUD selling across the board, after the RBA resorted to talking down the local currency at its policy decision released some minutes ago. The RBA left the cash rate on hold at 1.50%, while markets believe that the Aus central bank will refrain from raising rates in the coming months.

However, the cross found buyers once again near 88.20 levels, as the renewed strength seen behind the USD/JPY pair helps keep the downside capped in AUD/JPY. The USD/JPY pair regains momentum and trades near the highest levels two-months above 113 handle, largely on the back of rising demand for the greenback across its main competitors.

Also, the Japanese political jitters combined with downbeat Bank of Japan Q3 Tankan Survey weighed down on the Yen, continue to offer some support to the cross. With the RBA verdict out of the way, attention now turns towards the Fedspeaks for fresh insights on the US interest rates outlook.

AUD/JPY Technical Strategy

Omkar Godbole, Analyst at FXStreet noted: “A break above 88.45 [38.2% Fib R of Aug 8 low] would open up upside towards 88.70 [10-DMA] and 88.89 [Sep 27 high]. On the downside, breach of support at 88.04 [previous day's low] would expose 87.66 [50-DMA] and 87.35 [Aug 4 low].”