The AUD/JPY cross is seeing a rebound in the Asian session on Thursday, moving back above the 99.00 mark after touching a multi-week high the day before. This bounce is being supported by a more hawkish stance taken by the Reserve Bank of Australia (RBA), with the central bank indicating that policy will need to be restrictive until inflation reaches the target range. RBA Governor Michele Bullock also mentioned that recent data has not affected the policy outlook significantly. Additionally, consumer inflation figures released on Wednesday showed that core CPI remains above the RBA’s target band, further supporting the case for no rate cuts in the near term.
The positive risk tone in the market is also boosting the Australian Dollar, as the safe-haven Japanese Yen (JPY) is seeing limited gains. However, the JPY losses may be capped by expectations of another rate hike by the Bank of Japan (BoJ) in 2024. The latest BoJ meeting minutes revealed that board members are vigilant about the risk of inflation overshoot and are considering adjusting monetary support moderately. This could help limit further losses in the JPY and keep the AUD/JPY cross in check.
From a technical perspective, the daily chart shows a ‘Death Cross’ formation, with the 50-day Simple Moving Average (SMA) crossing below the 200-day SMA. This signals caution for bullish traders, indicating that any upward movement may face resistance near the 100.00 psychological level or the 200-day SMA. These levels could act as key pivot points for the AUD/JPY pair, limiting its upside potential in the near term. Overall, the combination of RBA’s hawkish stance, positive risk sentiment, and potential BoJ rate hikes are likely to influence the direction of the AUD/JPY cross in the coming sessions.
In conclusion, the AUD/JPY pair is experiencing a bounce back towards a multi-week high, supported by the RBA’s hawkish stance and positive market sentiment. The Australian Dollar’s strength is being driven by the central bank’s commitment to maintaining a restrictive policy until inflation reaches the target range. Meanwhile, the Japanese Yen may face limitations in its losses due to expectations of another BoJ rate hike in 2024. From a technical perspective, the ‘Death Cross’ formation on the daily chart indicates potential resistance levels for the AUD/JPY pair, suggesting a cautious outlook for bullish traders. As the market continues to digest these factors, the AUD/JPY cross could see further movements in the near term based on central bank policies and market sentiment.
