AUD/JPY: Stalled recovery points towards risk-off returning

AUD/JPY found fresh bids once again near 85.50 levels, prompting renewed buying interest around the cross in the European session.

AUD/JPY regains 20-DMA at 85.60

The AUD/JPY pair rises +0.28% to 85.70, flirting with session tops reached last hour at 85.75. The latest leg higher the cross can be mainly attributed to fresh USD buying across the board, which helped USD/JPY to stage a solid rebound.

However, further AUD/JPY recovery looks fragile as AUD/USD remains on the offers amid retreating oil prices and Asian equities. Hence, the risk barometer, rightly, signals that risk-off is back in vogue, further confirmed by rising CBOE Volatility Index (VIX) – a fear gauge, as we move closer towards the UK Supreme Court’s Brexit decision.

Technical Levels

Higher side: 86.17 (5-DMA), 87.17 (Dec 16 high)

Lower side: 85.26 (50-DMA), 84.50 (psychological levels)