AUD/JPY dips back under 83.00 as risk assets see modest technical correction, but recent bullish trend likely intact

• AUD/USD has dipped under 83.00 as risk assets more broadly see technical corrections and after running into resistance at 83.50.
• But the pair may well find decent dip-buying interest above its 50 and 200DMAs, which would bode well for the bulls.

AUD/JPY has pulled back from earlier session highs close to the 83.50 level to back under the 83.00 mark again in recent trade as traders take profit on recent risk asset bets. Stocks and crude oil have also pulled back from earlier session highs as markets undergo a modest technical correction following recent risk-on driven moves.

While AUD/JPY now trades about 0.2% lower on the session, the pair continues to trade with on the week gains of nearly 0.5% and is still well over 3.0% up versus last Monday’s sub-80.50 lows. Recall that risk-assets like the Aussie have surged and safe-haven assets like the yen have suffered in recent days as Omicron fears have subsided. AUD has also had the added boost of strength in base metals and optimism that Chinese authorities will step in with more support for economic growth in 2022.

For now, AUD/JPY appears to be finding some support just above its 50-day moving average in the 82.80s. Should that level go, there is plenty more nearby support to the downside in the form of the 200DMA in the 82.60s and an important balance area (that has recently functioned as resistance then support) around 82.50. An uptrend has been capping the price action for AUD/JPY over the past few weeks and technical selling as the pair failed to break above this trendline earlier in the session likely has something to do with the recent pullback from highs.

But that doesn’t mean that AUD/JPY’s recent bullish run is over. If the pair can find good dip-buying interest and remain supported to the north of its 50 and 200DMAs, that bodes well that a move back towards 83.50 is on the cards. But technicians should be aware that for the rest of the week, FX markets may struggle to trade with much conviction given that many market participants in Australia, Europe and the US will be away for Christmas/New Year’s celebrations.