The bullish continuation pattern has helped the AUD/JPY pair to cling higher amid improved risk appetite. As investors pile up on their risk appetite, the Australian dollar has managed to recover the selloff in the aftermath of the COVID-19 pandemic.
On the downside, risk sentiment can deteriorate due to investors’ worries about risk-aversion in the equity market. In a risk-off environment, gains can stall in the risk-sensitive currency pairs.
The recent bullish momentum has already stalled as the pair was challenging a well-established resistance level.
Last week, the AUD to JPY pair made a decisive break above the previous 2020 high to reach 16-months high – a level not seen since the beginning of May 2019.
The uptick increase in risk appetite was mainly motivated by the global economic rebound in the wake of the coronavirus and further improvement on this front can continue to support the AUD/JPY pair.