AUD/JPY Analysis: Observed sharp rise in triangle breakout

The AUD/JPY pair has seen a decent rally early in the European session. The rise in the risk barometer is underpinned by Japan's Prime Minister Hirokazu Matsuno announcing an aid package providing more than ¥2 trillion to help households against rising prices.

As higher import costs, rather than local causes, are the main contributor to the inflationary pressures, the Japanese government and the Bank of Japan (BoJ) are concentrating on maintaining the expansionary policy to keep inflation close to targeted levels.

Despite the Reserve Bank of Australia (RBA) having suggested pausing the rate-hiking cycle at its meeting in April, the Australian Dollar is strengthening. It appears that the RBA's policymakers are OK with the Australian inflation rate's two-month drop.

The resistance-turned-support level drawn from the high of March 21 at 88.48 has been passed by AUD/JPY. The Symmetrical Triangle chart pattern, which predicts future volatility growth, has also been broken by the cross.

The 20-period Exponential Moving Average (EMA), which is now hanging around 88.43, would continue to provide support for the Australian Dollar.

The Relative Strength Index (RSI) (14) is currently edging closer to entering the bullish zone.

Investors would have the best chance to purchase around the 20-EMA at approximately 88.43, which would push the risk barometer in the direction of the March 20 high at 89.24 and then the psychological barrier at 90.00.

In a different scenario, the cross would go toward the March 20 bottom at 87.14 if the south side moved below the March 21 low at 87.71. If the latter is broken, the asset would be exposed to a new yearly low close to the March 16 high of 86.61.