AUD/JPY clocks two-week highs on risk reset

• Yen under pressure as US stocks recoup early losses to end on a positive note.
• AUD/JPY hit two-week high of 82.50 in Asia.
• A wider Aussie trade surplus could put a bid under the AUD.

The AUD/JPY pair rose to 82.52 in Asia - the highest level since March 21 as the US stocks flashed green.

The Dow Jones Industrial Average (DJIA) recovered more than 700 points from the intraday lows to finish the day up 230 points or nearly 1 percent. The stocks picked up bid, reportedly due to speculation that tough talk from the US and China is a negotiating tactic and both sides will eventually reach a deal to avoid a full-blown trade war.

Also, expectations for strong US Q1 corporate earnings growth could have put a floor under the S&P 500.

The risk reset weakened the demand for the anti-risk JPY, and pushed up AUD/JPY to two-week highs. The cross could extend gains further towards 83.00 if Australia reports a wider trade surplus figure.

As of writing, the currency pair is trading at 82.34. The S&P 500 futures have surrendered gains and that may have pushed AUD/JPY lower to 82.34 from 82.52.

AUD/JPY Technical Levels

A clear break above 82.58 (March 21 high) would open up upside towards 83.00 (psychological hurdle) and 83.32 (Feb. 14 low). On the other side, a move below 81.499 (March 5 low) could yield a deeper pullback to 80.83 (April 4 low) and 80.76 (March 28 low).