AUD/JPY clocks 14-month high

A spike in the treasury yields following Yellen testimony weighed over the Japanese Yen, pushing the AUD/JPY cross to 87.78, the highest level since December 2015.

Hovers around long-run 50% Fib

At the time of writing, the cross was trading round 87.64, which is the 50% Fibonacci retracement of the drop from the November 2014 high of 102.844 to June 2016 low of 72.437.

The bid tone around the AUD strengthened last week after the China trade data bettered estimates on all fronts. The strong Chinese PPI reading further boosted the demand for the Aussie. At the same time, the Dollar-Yen pair staged a rebound from 113.25 levels to 114.25 levels. Moreover, the Yen has faced the brunt of the recovery in the treasury yields.

Consequently, the AUD/JPY cross jumped from 86.80 to a high of 87.78 levels. Keep an eye on the Treasury yields as the Yen pairs are likely to track could take cues from the same pre and post US CPI release.

AUD/JPY Technical Levels

A daily close above 87.64 (50% fib) would open doors for 88.56 (Dec 2015 high), above which the cross could target 89.60 (weekly 200-MA). On the other hand, a breakdown of support at 87.09 (Jan low) could yield a pullback to 86.50 (10-DMA) and then to 85.71 (50-DMA).