AUD/JPY Taps 80.00 Handle after RBA Maintains Status-Quo
Extending its rebound from multi-month low level for second consecutive day, the AUD/JPY cross surged to tap 80.00 psychological mark after the RBA decided to leave the cash rate unchanged.
Following its decision to cut its policy rates at May meeting, the RBA decided to hold its monetary policy stance and left its cash rate unchanged at 1.75%. The Board judged that overall growth is continuing and is backed by domestic demand and exports. The central bank remained concerned about inflation being quite low but also expected it to return to the target range over a period of time. The RBA also justified its status-quo on recent action by Chinese policymakers that support the near-term economic growth outlook.
Moreover, the AUID/JPY cross sharp up-move over the last couple of days is also supported by the fact that the Japanese Yen has failed to extend its last week's risk-aversion gains and is retreating broadly against most major currencies.
Market would now turn their focus to the Chinese trade balance data, due to be published tomorrow, and next week's Bank of Japan's monetary policy decision in order to determine the near-term direction for the pair.
From technical perspective, the pair has been oscillating between 81.00-78.00 broad trading range, held since last four week. Hence, it would be prudent to wait for a decisive break-out of the current trading range before confirming the near-term direction of the pair.
Technical levels to watch
On a sustained move above 80.00 psychological mark, the pair could be headed back towards the top end of the trading range resistance near 80.70-80 zone. A convincing break through the trading range resistance would now open room for further near-term appreciation for the pair.
On the flip side, 79.30 zone now seems to act as immediate downside support, below which the cross could drift back to the lower end of the trading range (78.30-25 zone), which remains key support to defend. A decisive break below the trading range support should now open room for further depreciating move for the cross, initially towards retesting Feb. lows support near 77.60-55 area before heading towards its next major support near 75.55-50 area.