AUD/JPY: Buyers target 50-DMA after Australian retail sales

• The seasonally adjusted Retail Sales (MoM) rose 0.1% versus 0.2% expected.
• Risk-on remains on the card amid expected easy monetary policy propelled Wall Street.
• The trade/political headlines to gain major market attention for now.

The AUD/JPY pair surges more than 10 pips to 75.84 after Australia’s Retail Sales data published early on Thursday. The seasonally adjusted Retail Sales for May month grew 0.1% versus 0.2% market forecast and -0.1% previous readout on a monthly basis.

With the upbeat data at Australia and market’s favor for equities hurting the Japanese Yen (JPY), not to forget the commodity front’s upside on the back of the US Dollar (USD) weakness, the pair managed to recover on Wednesday.

Expectations of policy doves to step forward towards the Federal Reserve and the European Central Bank (ECB) increased the odds of future easy money and favored the Wall Street off-late.

However, light trading session due to the US holiday curbed the pair moves during the early Asian session.

Traders now focus on the US-China headlines where the mixed tone of the policymakers and no developments since trade truce has been disturbing the global investors.

Recently, the Reuters reported that the US officials scheduled a call between the US and Chinese diplomats during the next week. Challenging the sentiment was the Bloomberg report stating that the US doesn’t consider Huawei ban as illegal.

Technical Analysis

With its repeated failures to clear 50-day moving average (50-DMA) level of 75.93, chances of the pair’s pullback to 23.6% Fibonacci retracement of April-June downpour at 75.53 and 21-DMA mark around 75.13 seem brighter. However, multiple highs marked during late-June near 74.80 can restrict the pair’s additional declines.

On the upside break of 75.93, buyers can confront the 2-month resistance area, namely 76.40/28 which holds the key to the pair’s run-up to 50% Fibonacci retracement level of 77.34.