AUD/JPY supported above 70.55, remains close to multi-month highs

• AUD/JPY ticks down from two/month highs at 71.08 to find support at 70.55.
• The aussie puts an end to a three-day rally as ma=rken sentiment falters.
• The overall trend remains positive with the pair consolidating near highs.

Aussie’s three-day rally from 68.65 lows has been capped at two-month highs right above 71.00 before pulling back to the mid-range of 70.00, turning red on daily charts.

RBA’s lowe and the negative market mood hit the Aussie

The pair has pulled lower on Thursday, weighed by Reserve Bank of Australia governor Lowe’s comments announcing that the bank is ready to increase bond purchases if necessary. Lowe’s dovish comments and the overall deterioration of the market sentiment after Trump accused China of a massive disinformation campaign, have increased bearish pressure on the aussie, favouring the safe-haven yen.

The pair, thus, has put an end to a 3% rally over the previous three days fuelled by the upbeat market sentiment on the back of plans to ease COVID-19 restrictions, which have increased hopes of a quick economic recovery.

AUD/JPY limited below trendline resistance at 71.10

Australian dollar’s rally has been capped by the upward trendline resistance at 71.00. A convincing move above that line might set the pair aiming towards early March highs at 71.50 before testing the 200-day SMA, now at 72.00.

On the downside, the pair is trading comfortably above the 100-day SMA at 70.40. Below that, next support levels might be at 70.00 psychological level and 68.55 (May 14 lows).

AUD/JPY key levels to watch