AUD/JPY is the top performing trade today, gaining a healthy 188 pips — all of it after the non-farm payrolls report.

The daily chart shows that the 55-day moving average has been a key support level since late February. That proved to be the case once again yesterday. The rally today broke a minor downtrend and creates a tidy three-candle reversal.

AUDJPY technical analysis chart May 3, 2013

My takeaway is that the trend is higher and that the pair is headed toward the late-April high of 102.94. That said, the risk-reward on a long might not be right until there is a pullback. A break above 103.00 is a clearer buy signal.

The main risk is the RBA decision on Tuesday. Economists are backing away from calls for a rate cut but the OIS market shows it’s a 50/50 decision. I think they will hold so that adds to the case for longs.