AUD/JPY recovers to 50-day SMA hurdle as Asian stocks trade in the red

• AUD/JPY is probing the 50-day SMA hurdle, having hit three-week lows on Friday. 
• The Asian stocks trade in the red on fears of fresh coronavirus lockdown restrictions. 
• Risk aversion favors a deeper drop in the AUD/JPY pair. 

While AUD/JPY has bounced up from three-week lows, it struggles to chart a convincing break above a crucial technical hurdle. 

The pair is currently trading around the 50-day simple moving average (SMA) hurdle at 76.30, having hit a low of 75.98 on Friday. That was the lowest level since Aug. 25. 

The pair is having a tough time scaling the 50-day SMA alongside losses in the Asian equities. As of writing, stocks in Australia and New Zealand are down 0.5%. The Shanghai Composite index is nursing a 0.26% loss, and shares in Hong Kong and South Korea are flashing red. The futures tied to the S&P 500 are also down 0.10%. Japanese markets are closed for a public holiday.

The risk-off tone could be associated with the resurgence of the coronavirus across the globe. Britain is already considering a new lockdown, while countries from Denmark to Greece announced new restrictions on Friday. 

Investors fear that new lockdown restrictions would torpedo the nascent recovery, and the situation would worsen if the US fiscal impasse over additional stimulus persists. 

The anti-risk Japanese yen will likely pick up a bid, sending AUD/JPY back to Friday’s low if the stock markets continue to trade in the red during the day ahead. In particular, the US technology stocks could feel the pull of gravity as speculators have recently boosted their bearish bets to the highest level since April 2008. 

Technical levels