Could AUD/JPY break this resistance ahead of Aussie jobs and BoJ?

As we reported earlier, the U.S. dollar/Japanese yen (USD/JPY) currency pair could be poised for a bullish breakout potentially after the Federal Reserve almost certainly raises interest rates tomorrow. We anticipate that the FOMC may prepare the market for two further rate increases this year, thanks to recent improvement in economic conditions and rising consumer inflation in the US which hit a 6-year high of 2.8% as the Bureau of Labor Statistics reported earlier today. If this turns out to be the case, the USD/JPY could stage a bullish breakout and this in turn may lead to similar moves in other yen crosses, including the AUD/JPY. 

Today the generally positive sentiment in the stock markets has helped to keep this risk-sensitive AUD/JPY cross supported ahead of Aussie employment data on Thursday and the Bank of Japan’s policy decision a day later on Friday. In the event, the Aussie jobs data comes out ahead of expectations, or the BoJ does not deliver a surprisingly hawkish policy statement, then the AUD/JPY could break higher, if it hasn’t already done so before then.

Recently, the AUD/JPY has found it difficult to get past the 84.50 key resistance level. However, the corresponding sell-offs have been progressively shallower, suggesting price is gearing up for a potential breakout. In the event the bulls eventually come out on top and 84.50 is taken out, then we could see follow-up technical buying pressure towards the next resistance and long-term trend line at 87.00-87.25 area. However, if support at 82.60 gives way first then we would have to put our bullish views on hold until further confirmative price action emerges.