AUD/JPY tests 50-DMA for the first time in 4-1/2 month

AUD/JPY tested 50-DMA for the first time after September 30, 2016 as the offered tone around the Aussie dollar gathered pace ahead of the RBA rate decision.

Eyes RBA

The central bank is expected to keep rates unchanged at 1.5%. However, traders believe the recent rally in the Aussie dollar may not have gone down well with the RBA policy makers. The central bank has made it clear time and again that it likes a weaker AUD.

It remains to be seen if the RBA calls strong AUD a result of the sharp rise in commodity prices or attempts jawboning the currency. FX traders would also watch out for RBA’s comments on the drop in inflation in the fourth quarter.

AUD/JPY Technical Levels

The cross printed a low of 85.24 and was last seen trading around the 50-DMA level of 85.41. A break below 85.00 (zero figure + 23.6% of Trump rally) could yield a sell-off to 84.65 (Dec 19 low) and to 84.55 (Jan 5 low). On the other hand, a break above 85.66 (session high) would open doors for a re-test of 10-DMA level of 86.00. A daily close above the same would expose 86.73 (Feb 3 high).