This pair is like the ultimate risk barometer right now: the Aussie has an extremely high beta to overall market risk while the yen is a traditional safe haven. Thus, in periods of risk aversion this pair tends to fall and it tends to rise when risk is “on”. As signs that stabilisation in the Eurozone develop now that the ECB has stepped in to pump the European financial system with liquidity, combined with signs that global growth may have reached its nadir at the end of 2011, then the ground is fertile for this FX cross.

AUDJPY has lagged behind gains in other Aussie crosses in recent months reflecting concerns in the market and the continued unease with the European sovereign crisis fuelling demand for yen. However,after breaking the daily trendline, we are approaching a key resistance level at 82.80, which has capped gains since September 2011. Above here we could see a move back towards the 85.00 highs.



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