AUD/JPY peeps above 86.00 as RBA abandons dovish wording on inflation

• RBA abandons dovish wording on inflation.
• AUD/JPY peeped above 86.00 levels.
• Already strong AUD could find more bids.

The Reserve Bank of Australia (RBA) maintained the status quo as expected,  but abandoned dovish wording on inflation. The statement does not carry the reference to inflation staying low for 'some time'. So far, the response from the AUD has been muted.

AUD/JPY added 15 pips post-RBA to clock a fresh session high of 86.06. As of writing, it is trading at 86.02 levels.

AU-Japan yield differential rises

The cross is likely to remain bid and extend gains during the day ahead as the yield differential is rising in the AUD-positive manner. The 10-year spread, which stood at 252 basis points (bps) yesterday, now stands at 255 bps; its highest level since Nov. 15. Also, the European desks may offer Japanese Yen if the equities remain in the risk-on mode.

AUD/JPY Technical Levels

A move above 86.29 (monthly 100-MA) would open up upside towards 86.70 (monthly 5-MA) and 87.00 (psychological hurdle). On the other hand, a break below 85.67 (4-hour 10-MA) could yield a sell-off to 85.31 (4-hour 100-MA) and 85.00 (psychological level).