The AUD/JPY currency pair has experienced fluctuations, rising to a high not seen in over a week during the recent Asian trading session. Despite this ascent, the pair struggles to sustain momentum above the psychological level of 101.00, ultimately retreating towards the lower end of its daily trading range and hovering near the significant 200-day Simple Moving Average (SMA).
The Japanese Yen remains under pressure, largely influenced by growing uncertainties regarding potential interest rate hikes from the Bank of Japan (BoJ). Market participants are concerned that the current political climate in Japan might hinder the BoJ’s ability to implement further rate adjustments. Additionally, shifting risk sentiment, fueled by developments surrounding the recent U.S. elections where former President Donald Trump appears to be gaining traction, has diminished the appeal of the Yen as a safe-haven asset, thereby benefiting the AUD/JPY cross.
On the Australian dollar front, recent positive indicators from Chinese purchasing managers’ indexes (PMIs) signal that government stimulus efforts are yielding improvements in business conditions, fostering a sense of optimism. Coupled with the Reserve Bank of Australia’s (RBA) assertive monetary policy stance, these factors lend further support to the Australian dollar, enhancing its appeal against the Yen.
However, minutes from recent BoJ meetings have indicated that there may still be avenues for policy tightening, potentially curbing any further advancements in the AUD/JPY pair. From a technical standpoint, the price movements observed over the previous month suggest a period of indecisiveness among traders about the future trajectory of the currency pair. Given the mixed economic signals, it might be wise for traders to await clearer signs of sustained buying momentum before jumping in for anticipated upward movement from the lows witnessed in September.
