The pair ran into a test of its 12 May low at 87.30 two weeks ago but the daily support held before we saw a bounce back above 90.00 in the run up to the new year. But in the past few sessions, the yen has been making some decent headway and although USD/JPY has recovered somewhat from its earlier drop, other yen pairs are not as fortunate today.
AUD/JPY in particular is a peculiar one as the drop comes as equities sentiment is holding better today. S&P 500 futures are up 42 points, or 1.1%, at the moment but at the same time, we are seeing a solid bid in bonds as well. 10-year Treasury yields are down over 7 bps to 3.758% currently and that is perhaps what is weighing on yen pairs.
For the case of AUD/JPY, we are coming back to the test of the key support highlighted above with the 100-week moving average seen at 87.03 also a pivotal technical point to be wary of in the sessions ahead.
A firm break below that could very well see another sharp downside leg be established for the pair after having consolidated in a large and volatile range for the most of 2022.
