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AUD/JPY: Bull progress pauses at 50-DMA / 50%fibo

FXStreet (Bali) - After six consecutive days of unperturbed gains, AUD/JPY finally saw some opposition above 95.00 round number, disallowing further advances and resulting in a retracement that erased Friday's gains to currently trade just below 95.00 amid inconclusive price action on Monday.

Sentiment-wise, the impressive comeback into risk assets, especially in the SP500 - we saw the largest weekly gain in 2y last week -, led to renewed upward pressures in USD/JPY last week, which coupled with a buoyant AUD, still holding the 0.8650 key support line against the USD, led to a major recovery in the always risk-sensitive AUD/JPY cross. Sustainability in the pair's bullish mood is likely to depend on whether carry-seeking behaviour returns in the short term, a potential scenario that FX Strategists at ANZ are counting on.

From a technical perspective, following the startling recovery in risk, the pair stalled at the 50-day EMA, a level that also converges with the 50% fibo retrac from the 96.70-91.80 bear run. If bears are to dent the prevailing bullish momentum, a break below 94.00-94.30 (includes penetration of 20 and 200-day EMA) is required, which may expose lower levels for a potential bear trend resumption. Meanwhile, on the upside, a break through 95.80-96.30 ( includes 100-day EMA, 61.8% fibo Sept-Oct decline, key parallel resistance) is necessary for further longs to re-group aiming for a retest of this year's high.

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