AUD/JPY trims losses on upbeat Aussie inflation numbers even as bond yield stays flat

The upbeat Australia inflation gauge helped the Aussie dollar trim losses, though the government bond yields hardly reacted to the data. 

AUD/JPY recovered from the 5-day low of 87.86 to trade around 88.13 levels. The cross is back above the support offered by the trend line sloping upwards from the June 6 low and June 24 low. 

The Melbourne Institute inflation gauge showed the price pressures jumped 0.1% in July following a 0.1% contraction in June. Annual inflation rose to 2.7% in July after falling sharply to 2.3% in June. Furthermore, copper prices hover near 2-year. 

Thus, AUD regained some poise, although the Australia 10-year government bond yield has remained flat lined. Meanwhile, the Japanese Yen remains bid on account of the heightened geopolitical tensions in the Korean peninsula.  Consequently, the cross still remains weak, currently down 0.33% on the day. 

AUD/JPY Technical Levels    

A break below 87.89 (4-hour 100-MA) would expose 87.65 (double top neckline). An end of the day close below the same would confirm the bearish reversal and open doors for 86.50 (38.2% Fib R of 81.78-59.42). On the higher side, resistance is seen at 88.37 (session high) ahead of 88.56 (4-hour 50-MA) and 88.83 (Friday’s high).