AUD/JPY – Risk barometer on rise after China CPI release

AUD/JPY which is widely considered as a risk barometer, strengthened post China CPI release, indicating the risk sentiment across the global markets could stabilize, although the cross is yet to take out critical technical resistance.

Strong resistance at 79.00

On technical charts, we see that the area around 79.00 handle has acted as a strong hurdle since Oct 5. Having recovered from the low of 78.38, the cross is once again losing steam near 79.00; now trading around 78.90 levels.

Moreover, the uptick in the pair suggests a rise in the CPI and PPI numbers in China are being well received by the market, although we keep in mind the fact that trade numbers released yesterday painted a dismal picture of world’s second largest economy.

AUD/JPY Technical Levels

A break above 79.00 handle preferably on the daily closing basis would open doors for a quick fire rally to 80.00 – 80.20 (200-DMA), above which resistance at 81.15 (July 15 high). On the lower side, breach of 5-DMA of 78.57 could yield a test of 77.83 (100-DMA) and 77.50 (50-DMA).