AUD/JPY technicals and rationale - TDS

Analysts at TD Securities explained that they hit a target on their short AUD/JPY trade idea overnight and said that this position was established on January 24th, closing the position collecting a profit of ~3.5%. They offered their rationale and technicals as follows.

Key Quotes:

"Our initial motivation to rotate from a USDJPY short into an AUDJPY short was underpinned by the pair's high beta to risk and the belief that AUD was overvalued (as our FV model was indicating at the time). Though we close our position, we continue to think that the path of least resistance remains lower for the cross particularly as risk sentiment remains fragile. The AUD-leg should continue to trade heavy with some AUD/crosses through key supports (see AUDNZD below the 1.0850 pivot/200-dma for instance) and waning macro momentum further weighs on market-implied RBA expectations.

Technicals

Resistance is likely to be met around 86.55, near the 200-dma and offers an opportunity to fade a potential rally."