AUD/JPY is knocking on the door of the highs for the year
The pair hit a high if 85.93 earlier today, which is the highest since February 2018 but is seen now trading around 85.60-70 levels in European trading.
There is key resistance from the year's high @ 85.80 and that will be a key spot ahead of the daily/weekly close, as the yen continues to slide against other major currencies.
AUD/JPY used to be a key risk barometer for the market and while equities have shown much resilience in recent weeks and gradually building back to the highs, we're not exactly brimming with optimism and confidence that the risk rally will keep running.
As the Fed looks to taper and the global economy still facing risks posed by COVID-19, inflation, and supply bottlenecks, there is reason to expect bouts of volatility to seep into the market in the weeks/months ahead.
But at the same time, the technicals tell a different story and it is hard to argue with the charts at times. Adding to that is the yen continuing to drift lower as bond yields surge higher - not just in the US but everywhere else too.
For AUD/JPY, a firm break above key resistance at 85.80 will pave the way for a push towards 89.00 next before potentially revisiting the 2017 high at 90.30.
To compound yen woes further, it isn't the only yen pair that is looking for more upside potential as CAD/JPY and GBP/JPY are also staying on course for further breakouts.
CAD/JPY is keeping higher so far on the week as the upside momentum gradually extends with buyers setting their sights on the October to November 2015 highs near 93.25. Beyond that, it is tough to pick at further resistance levels for the pair on the way up.
Meanwhile, although a little softer today, GBP/JPY is off earlier highs of just above 158.00 and is still holding higher on the week as buyers look to solidify a technical break above 156.00 and its January 2016 high of 156.61.
The 50.0 retracement level of the 2015 to 2016 downswing beckons as the next key resistance level and that is seen at 160.25.
Besides that, other yen pairs such as NZD/JPY and CHF/JPY are also seeing an extension to their recent breakouts and those just add to more technical weakness for the yen as we navigate through trading sentiment at the moment.