FxWirePro: AUD/JPY hits fresh 7-year high, outlook bullish

Chart - Courtesy Trading View 

Spot Analysis:

AUD/JPY was trading 0.64% higher on the day at 95.440 at around 10:50 GMT

Previous Week's High/ Low: 94.573/ 90.881

Previous Session's High/ Low: 94.994/ 93.766

Fundamental Overview:

The Australian dollar rallied across the board in reaction to the RBA’s latest rate surprise during early Tuesday morning.

The Reserve Bank of Australia (RBA) crossed wide market expectations with a 50 basis points (bps) hike to 0.85%.

The Statement that followed, however, was less hawkish and probed the quote after the initial knee-jerk reaction to the RBA’s rate hike.

On the other side, the Japanese yen keeps slipping lower after BOJ Chief Haruhiko Kuroda made no mention of exchange rate value in his latest comments.

Kuroda said earlier on Tuesday, “If yen moves are not too sharp, weak yen is beneficial for Japan’s economy."

"Must be mindful that weak yen could have negative impact on households, smaller service-sector firms," Kuroda added.

Expressing his outlook on the Japanese economy, Kuroda said "Japan’s economy is improving as a trend and is expected to recover ahead."

Technical Analysis:

- AUD/JPY extends break above daily cloud, Chikou span is biased higher

- Momentum is bullish, Stochs and RSI are biased higher, volatility is high and rising

- GMMA indicator shows major and minor trend are strongly bullish

- MACD and ADX support upside in the pair, major moving averages are trending higher

Major Support and Resistance Levels:

Support - 94.42 (5-DMA), Resistance - 98.12 (Upper W BB)

Summary: AUD/JPY trades with a bullish bias, scope for further gains. Pair poised to break above 98. Major weakness only below daily cloud.