AUD/JPY: Flashing marginal gains, 100-day MA is key support

• AUD/JPY is attempting gains amid the uptick in the S&P 500 futures.  
• Big gains may remain elusive on trade optimism and pessimism seesaw.

AUD/JPY is reporting marginal gains at press time, having defended key support for a third straight day on Thursday.

The currency pair is currently trading at 73.83, representing a 0.15% gain on the day.

The bid tone around the anti-risk Japanese Yen has likely weakened, possibly due to the uptick in the US index futures. Currently, the S&P 500 futures are adding 0.15% on the day.

China’s commerce ministry on Thursday dismissed reports stating that the trade talks between the US and China are in trouble and reiterated that the world’s second-largest economy will work with the US side on the basis of equality and mutual respect in addressing the core concerns.

Even so, the US equity markets dipped Thursday. For instance, the Dow Jones Industrial Average fell 0.20%. The risk sentiment, however, is looking to stabilize in Asia. The AUD/JPY pair may extend gains if the risk reset gathers pace.  

That said, investors may be wary of initiating bullish bets on stocks, courtesy of optimism and pessimism seesaw. Both sides have a history of mentioning the change of interim deal only to backtrack in the same sentence.

Therefore, big gains in AUD/JPY look unlikely – more so, due to the downbeat Aussie PMI released earlier today. The headline Manufacturing PMI came in above 49.8 forecasts to 49.9 but slipped beneath 50.1 prior while Services PMI declined to 49.5 versus 53.5 expected and 50.1 earlier.

Technical levels

The 100-day MA, currently at 73.59, has been restricting downside since Nov. 19. Therefore, a break below that level, if confirmed, could embolden sellers, leading to a quick drop to 73.00.