AUD/JPY consolidates close to 50DMA just under 83.00, but on the cusp of a bullish technical breakout?

• AUD/JPY saw subdued trade amid a lack of Australia/Japan-related fundamental developments and remains close to its 50DMA at 82.94.
• The pair may be on the cusp of breaking to the north of a medium-term bearish trend channel.

AUD/JPY spent most of Wednesday’s trading session consolidating close to its 50-day moving average, which currently resides just to the south of the 83.00 level and trading well within recent ranges. In Asia Pacific trade, kneejerk weakness in NZD following a more dovish than expected RBNZ rate decision pulled the Aussie lower and dragged AUD/JPY as low as the 82.70s. The pair then gradually rebounded back to current levels around 83.00 where it looks set to end the session.

FX markets focus has been elsewhere, such as on the evolving European Covid-19 crisis, on a barrage of US data, Fed speak and the Fed minutes. That, combined with a lack of either Australia or Japan-related fundamental developments, meant it is not surprising to see AUD/JPY trade with a lack of conviction. That lack of conviction is likely to be the story of the rest of the week, with most US market participants now on holiday for Thanksgiving.

To the upside, the most immediate resistance for AUD/JPY is this week’s highs in the 83.20 area. To the downside, aside from Tuesday’s lows in the 82.60s, the next main area of support is last week’s low at 82.15 and then the early September high at almost bang on 82.00 just below it.

AUD/JPY breaking out of medium-term bear trend?

Looking at AUD/JPY over a longer time horizon, the pair may be showing some bullish signs that it is about to break out of a bearish trend channel that has been containing the price action since the start of November. A break to the north would signal a potential move towards the pair’s 21DMA and 15 November highs in the 84.00 area.