AUD/JPY Trading Insights

• AUD/JPY has risen above 94.00, reflecting improved risk sentiment and better-than-expected retail sales data from China.
• The Bank of Japan is anticipated to maintain its interest rate at 0.50% on Tuesday, which should bolster AUD/JPY’s performance.
• The Australian dollar continues to show resilience amid differing stances between the RBA and BOJ.

AUD/JPY has gained traction on Monday, bolstered by a tentative uplift in risk sentiment originating from the Reserve Bank of Australia (RBA) and Bank of Japan (BOJ), alongside a promising policy outlook.

The currency pair is holding around 94.46, marking an uptick of over 1% for the day. This rise occurs as investors are reallocating to high-yield currencies, driven by divergent monetary policy expectations, thereby enhancing overall risk sentiment.

Improved investor appetite seems to align with rumored diplomatic engagements from Iran through Gulf intermediaries, suggesting a potential easing of tensions with Israel. While there’s yet to be a formal agreement, these reports have positively swayed market sentiment.

This has consequently decreased the demand for traditionally safer currencies like the Japanese Yen (JPY), while the Australian Dollar (AUD) received a boost from robust retail sales figures in China for May.

Traders are keenly awaiting BOJ’s policy decision on Tuesday. It is widely expected that interest rates will remain at 0.5%, with possible updates on the pace of government bond purchases.

The ongoing differences in monetary policy are benefiting AUD/JPY as the RBA seems to maintain a relatively hawkish viewpoint.

AUD/JPY Expected to Surge Past 94.00

AUD/JPY is experiencing an upward trend on Monday, currently near 94.46. After bouncing from the 50-day simple moving average (SMA) at 92.42, the pair has surpassed the midpoint of the November-April decline at 94.23.

A morning star inversion pattern has formed beyond the 38.2% Fibonacci retracement at 92.30, indicating a shift in momentum since last week’s downturn.

Immediate resistance lies at 94.23. If this level is breached, it could lead to a rise toward 96.16, which aligns with a 61.8% Fibonacci retracement, followed by a psychological threshold of 97.00.

On the downside, initial support is identified at 92.30, coinciding with both the Morning Star Base and the 38.2% Fibonacci level. Below that, a 23.6% retracement at 89.91 serves as deeper support, with a crucial drawback target at the March low of 86.05 should bearish pressure reemerge.

AUD/JPY Daily Chart Overview

Meanwhile, the relative strength index (RSI) for the daily timeframe is nearing 60, indicating a healthy rise without breaching the overbought territory.

This suggests that while bullish momentum is accumulating, the RSI hasn’t entered overbought conditions yet; there’s still room for further movement before any exhaustion occurs.

Upcoming Economic Indicators

Bank of Japan Interest Rate Decision

The Bank of Japan (BOJ) announces its interest rate decisions following each of its eight annual meetings. Typically, if the BOJ adopts a hawkish perspective on inflation, it’s bullish for the Japanese Yen (JPY). Conversely, a dovish outlook might lead to a weaker JPY if rates are held steady or cut.

Next release: June 17th, 2025 03:00

Frequency: Irregular

Consensus: 0.5%

Previous: 0.5%