AUD/JPY holds near ¥108.8 support as Reserve Bank of Australia rate hike shapes outlook

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Australian Dollar vs Yen drops 0.5% today

Highlights

The Reserve Bank of Australia increased its cash rate by 25 basis points to 4.6%, shifting to tighter policy.
Initial Australian dollar gains against the yen faded as traders reduced bets on further RBA hikes and focused on possible changes from the Bank of Japan.
AUD/JPY trades below key moving averages with strong bearish momentum projected, and a next 2 to 3 day range of ¥108.8 to ¥109.9.

Fading rate hike gains as market reprices RBA and BOJ expectations

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.60%, marking a confirmed shift toward tighter monetary policy. This move typically bolsters demand for the Australian dollar versus the yen through a widening interest rate differential. However, according to Fxstreet, initial gains faded as traders scaled back expectations for further rate increases by the RBA and focused on a potentially more hawkish policy stance from the Bank of Japan.

Technical boundaries reinforce sellers as multiple indicators warn of downside

The pair is trading below the MA-20, MA-50, and MA-200 levels. Immediate resistance is identified at the Ichimoku Kijun of ¥109.55. MACD and ADX both indicate selling momentum, with RSI signaling a sell condition and CCI showing the pair as oversold. Stochastic RSI presents a buy signal, which contrasts with the negative readings in Bull/Bear Power and the Awesome Oscillator, both confirming intraday selling pressure.

Downside risk elevated if key support fails amid narrowing range

In the short term, AUD/JPY is expected to stay within a volatility band of ¥108.8 to ¥109.9 over the next two or three trading days. The likelihood of a move higher is very low, while the probability of further downside is high if support near ¥108.8 is breached. A break above ¥109.55 would be required to trigger a more bullish scenario, but the baseline expectation remains for range-bound price action.

Anton Kharitonov, analyst at Traders Union, sees AUD/JPY pressured by persistent selling momentum and a lack of clear bullish signals. He notes that despite the RBA’s rate hike, technical indicators remain negative, and the pair is capped below key moving averages. Range-bound action is likely unless the pair can break above ¥109.55. "Unless major resistance is reclaimed, the risks favor a further move lower toward ¥108.8."

Earlier, analysts noted that AUD/JPY maintained a bearish bias as selling pressure persisted despite the Reserve Bank of Australia's rate hike. The current analysis reinforces this negative outlook, highlighting ¥108.8 as a critical support level that, if breached, could open the door to further downside risk.

Source of Data: AUD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.