AUD/JPY at session highs, runs into 1-hour 50-MA

• AUD/JPY faded the drop to 86.88.
• The pair is gathering upside traction, currently chipping away at 1-hour 50-MA hurdle
• Focus on equity market sentiment

The post-RBA drop to 86.88 levels in the AUD/JPY pair was short lived as the markets digested the central bank's downward revision of the inflation forecasts and focused on the upbeat view on the labor market and lead indicators.

Currently, the pair is trading at 87.19 (1-hour 50-MA), having clocked a high of 87.22 levels.

The Japanese Yen is losing altitude despite losses in the Asian equity markets. Stock markets in Australia, New Zealand, and China are down at least 0.20 percent each. It appears as though the uptick in the treasury yields is weighing over the JPY. As of writing, the 10-year treasury yield is up more than one basis point.

Looking ahead - RBA's downward revision of the inflation forecasts could keep a lid no the gains in the AUD pairs. However, with the AUD/JPY cross, the story could be different as the offered tone around the Yen may gather pace if the European equities regain the bid tone.

AUD/JPY Technical Levels

A move above 1-hour 200-MA level of 87.35 could lift the pair to the upward sloping 100-day MA of 87.55 and 87.70 (Jul. 11 high). On the other hand, a failure to hold above 87.00 levels would shift risk in favor of a  drop to 86.69 (Oct. 31 low), under which a major support is seen directly at 86.01 (200-day MA).