AUD/JPY: Recovery from two-month lows stalls at hourly 100-MA

AUD/JPY recovered from yesterday’s two-month low of 75.97, but the subsequent move higher ran into offers around the hourly 100-MA level.

Trades below 5-DMA

At the time of writing, the cross was trading below its 5-DMA level of 76.62. Yen traders await next week’s Bank of Japan policy review as speculation is rift that the central bank may alleviate risks from ultra-low long-term yields, by pursuing a reverse "Operation Twist" – Sell long duration bonds and buy short duration bonds.

So far, the rise in the long duration yields has had negative impact on the Yen. Hence, traders are cautious and it would be interesting to see how the yield curve reacts if the BOJ announces reverse ‘operation twist’.

In the meantime, the Japanese led rout in bond markets and the resulting rise in the long duration government bond yields across Europe and other parts of the world has zapped demand for high yielders like AUD and NZD.

AUD/JPY Technical Levels

A breakdown of support at 76.38 (Sep 14 low) would open doors for a 76.41 (pivot S1) and 75.97 (yesterday’s low). On the higher side, breach of hourly 100-MA level of 76.73 would expose 77.06 (pivot R1) and 77.48 (hourly 200-MA).