AUD/JPY recovers from RBA-led dip, back above 77.00 handle

Having rejected at session high near 77.50 region, the AUD/JPY cross dropped to session low at 76.75 level after RBA decided to cut interest rates before retracing back above 77.00 handle to currently trade absolutely flat at 77.15 level. 

On Tuesday, the RBA decided to cut interest rates by 25 bps to a new record low of 1.5%. The move was in-line with market expectations of a rate-cut, fueled by recent slide in Australian inflation. Immediately after the announcement, the pair erased early tepid bounce gains and turned negative for third straight day. 

Ahead of RBA announcement, the Australian Dollar failed to build on to its recovery gains against its Japanese counterpart on disappointment from country's building approvals and trade balance data. 

Moreover, Yen witnessed a range-bound trade amid cautiousness in Asian equity markets and is also seen weighing on the AUD/JPY cross. Going forward, the cross will continue to take cues from the prevalent risk sentiment surrounding equity markets, driving demand for the traditional safe-haven currency, Yen.

Technical levels to watch

From current levels, immediate resistance is seen at 77.47 (session high), above which the pair seems to test 78.32 resistance (50-day SMA). On the downside, 76.73 (session low) seems to provide immediate support, which if broken seems to drag the pair towards 76.20 support area.