AUD/JPY Intermarket: Risk-on in equities overshadows iron ore drop, 50-DMA hurdle could be breached

AUD/JPY clocked a high of 84.34 on Wednesday before falling back to the supported offered by the confluence of 10-DMA and 5-DMA at 83.77 levels.

The pair closely followed the sell-off in iron ore prices before the ‘Macron rally’ rescued the battered the Aussie dollar and strengthened the offered tone around the Yen.

Iron ore has topped out near 90 in mid March before falling sharply to 60 levels this week. The AUD/JPY topped out near 87.50 in mid-March and closely followed the iron ore before decoupling in mid April.

This was largely due to the risk-on rally in the stocks and the resulting sell-off in the Japanese Yen. The S&P500 bottomed out at 2329 (Apr 13 low) and currently trades around 2400 levels.

The cross could take out the 50-DMA level of 84.36 if the stocks remain well bid. Iron ore looks oversold on charts and thus could witness technical correction. That may help the Aussie as well.