AUD/JPY trades around 86.00 levels ahead of BOJ decision

The AUD/JPY flirts with 86.00 handle ahead following Monday’s sharp losses on account of risk aversion and due to fears the BOJ’s aggressive policies could come under fire from Trump

Dow Jones dropped 122 points on the back of Trump’s immigration ban, leading to broad based weakness in the US dollar and a rise in the traditional haven assets like the Yen and Gold. 

The Bank of Japan (BOJ) is widely seen keeping the key policy tools unchanged. Governor Kuroda is likely to ‘taper’ the taper talk, but at the same time maintain that the BOJ policy does not target the exchange rate. Later in the day, the cross could take cues from the broader market sentiment.

AUD/JPY Technical Levels

A break above 86.19 (10-DMA) would expose resistance lined up at 86.52 (Jan 25 high) and at 87.09 (Jan 27 high). On the other hand, a breakdown of support at 85.73 (previous day’s low) could yield a sell-off to 85.33 (Jan 23 low) and then to 85.13 (50-DMA).