AUD/JPY review: pair has filled the early morning gap

The AUD/JPY gapped lower in Asia, courtesy of the risk-off developments over the weekend.
The pair is back attempting a break above the 200-day MA

Omkar Godbole FXStreet Contributor

The early morning surge in the Japanese yen was short-lived.

At press time, the AUD/JPY is looking to scale the 200-day MA of 81.92, having gapped lower at 81.62 earlier today, courtesy of the risk-off events over the weekend. To start with, China called off trade talks with the US and won't be sending vice-premier to Washinton, according to the Wall Street Journal.

Further, US sanctioned Chinese military agency and its director for buying Russian military equipment, forcing the world's second-largest economy to cancel military talks with Washington.

As a result, JPY opened higher across the board. However, the anti-risk Japanese currency has erased early gains, possibly due to a drop a 0.30 percent decline in the offshore yuan exchange rate (CNH). It is worth noting that JPY and other Asian currencies tend to closely follow the action in the Chinese currency.

Also, the early decline was short-lived, seemingly due to decreased prospects of further escalation of the trade war between two biggest economies of the world. Moreover, risk assets cheered China's watered-down response to new US tariffs last week.

Technically speaking, the bias remains bullish, although Friday's doji candle calls for caution. A break above 82.36 (Friday's high) will signal a continuation of the rally from the Sept. 7 low of 78.68.

Daily chart

Resistance: 81.92 (200-day MA), 82.36 (Friday's high), 82.80 (Aug. 8 high)

Support: 81.62 (session low), 81.70 (5-day MA), 81.32 (50-day MA)

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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