AUD/JPY clocks 5-month high of 87.86

An uptick in the Aussie bond yields strengthened the bid tone around the Aussie dollar, pushing the AUD/JPY pair to 87.86 in Asia; the highest level since Feb 16. 

The 10-year Aussie bond yield witnessed a solid recovery from the overnight low of 2.681% to 2.736%. The yield is up 3.5 basis points. The 2-year yield is up two basis points as well. 

The Japanese Yen remains on the back foot as the BoJ is still seen resisting the idea of policy tightening and is likely to keep QQE with yield curve control running for a prolonged period of time. The Japanese 10-yr bond yield is up 1 basis point at 0.09%. A break above 0.10% would boost speculation of BoJ action and strengthen the offered tone around the Japanese Yen. 

AUD/JPY Technical Levels

An end of the day close above 87.28 today would confirm the inverse head and shoulders breakout on the weekly chart. The daily RSI is overbought, while the weekly RSI is close to being overbought, thus the weekly 200-MA level of 88.71 (also monthly 50-MA) is likely to remain intact as resistance in the short-term. Ahead of the weekly 200-MA, the Feb high of 88.18 could offer resistance as well. On the downside, failure to hold above 87.28 (inverse head and shoulder neckline supp) would open doors for a pull back to 86.52 (weekly low) and 85.88 (weekly 5-MA).