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  • Despite the initial drop, AUD/JPY remains mostly positive after RBA’s SOMP.
  • Risk-on sentiment prevails despite sustained allegations on China by the US.
  • Japan considers more stimulus, relief to business rent likely.

Even if the RBA’s Statement of Monetary Policy (SOMP) flashes warnings, mainly due to the coronavirus (COVID-19), AUD/JPY remains positive around 69.40 on early Friday.

The RBA showed readiness to act while citing fears of a spike in Unemployment rate during its latest quarterly SOMP. The Aussie central bank also said it will not raise the cash rate ahead of progress being made on its employment and inflation targets.

Read: RBA SoMP: committed to do what i can to support jobs, June unemployment expected at 10%

Earlier during the day, Japan’s Overall Household Spending and Jibun Bank Services PMI flashed mixed results.

It’s worth mentioning that NIKKEI came out with the news suggesting Japan’s ruling party is considering a rent relief for small businesses for six months starting from June.

Market’s risk-tone remains positive amid hopes of the US-China trade talks, cited as early next-week by Bloomberg. As a result, the risk-takers even ignored another verbal attack on China by the White House Economic Adviser Larry Kudlow.

While portraying the mood the US 10-year Treasury yields emerge from the previous day’s fall to near 0.63% whereas Japan’s NIKKEI mark over 1.5% gains to 19,975 by the press time.

Moving on, the markets are likely to witness the pre-NFP trading lull but news/updates concerning the US-China trade relations and the coronavirus (COVID-19) could offer intermediate moves.

Technical analysis

Buyers cheer the pair’s U-turn from 50-day SMA as well as a successful clearance of 61.8% Fibonacci retracement of its February-March fall. Hence, 70.00 and April month top surrounding 70.20 can offer immediate resistance to the pair ahead of 100-day SMA near 71.05. On the downside, 68.90, comprising 61.8% Fibonacci retracement, as well as a 50-day SMA level of 67.60, becomes the key support.