The Bank of Japan hiked rates by 25 basis points, lifting the JPY against the AUD amid diverging central bank policies.
The AUD/JPY cross fell to 113.25 in early European trading Wednesday after the Bank of Japan raised its short-term interest rate to 1.0%, the highest level in over 30 years. The 25 basis points increase, widely anticipated, followed the BoJ’s two-day policy meeting and signaled further tightening ahead based on economic and inflation trends.
The Reserve Bank of Australia held its cash rate steady at 4.35% on Tuesday, pausing after three consecutive hikes this year. Despite the pause, RBA board members indicated potential future increases to meet inflation targets, contrasting with the BoJ’s hawkish shift.
Technical indicators suggest consolidation, with the 14-period RSI near 48 and the pair trading above its 100-day SMA. Analysts note limited downside risk as long as support holds above key levels.