- The Aud/JPY wins 0.17%, closing about 94.79 while the headlines on tariffs fail to boost the YEN.
- RBA decision in the focus; The markets await a dovish tone in the midst of a fragile feeling.
- Key resistance at 95.00; A break could open the door to 97.32 and 99.15.
- The first support is seen at 94.65 (Tenkan-Sen), then 94.18 and 93.00 (upper part of the Kumo).
The Aud/JPY rose on Monday and won 0.17%, ending the day about 94.79 while operators would digest the shares of the White House, which sent several letters to countries, establishing tariffs on their imports to the US. The operators are attentive to the monetary policy decision of the Bank of the Australian Reserve (RBA) later on Tuesday.
Aud/JPY price forecast: technical perspective
The Aud/JPY continues to consolidate, although the range is established. On the positive side, a clear rupture above 95.00 paves the way for more increases. Key resistance levels are at the maximum of February 12 at 97.32, followed by a maximum of January 30 at 98.75, before testing the annual peak of 99.15.
On the other hand, the first support would be the Tenkan-sen at 94.65, followed by the Senkou Span A test in 94.18. Faced with a greater weakness, the following support would be the Senkou Span B and the Kijun-sen around 97.77/70, followed by the upper part of the Ichimoku cloud (Kumo) in 93.00.
AUD/JPY – DIARY PRICE GRAPH
Australian dollar – frequent questions
One of the most important factors for the Australian dollar (Aud) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a country rich in resources, another key factor is the price of its greatest export, iron mineral. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and commercial balance. The feeling of the market, that is, if investors are committed to more risky assets (Risk-on) or seek safe shelters (Risk-Off), it is also a factor, being the positive risk-on for the AUD.
The Australian Reserve Bank (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of the interest rates of the economy as a whole. The main objective of the RBA is to maintain a stable inflation rate of 2% -3% by adjusting the interest rates or the low. Relatively high interest rates compared to other large central banks support the AU, and the opposite for the relatively low. The RBA can also use relaxation and quantitative hardening to influence credit conditions, being the first refusal for the AU and the second positive for the AUD.
China is Australia’s largest commercial partner, so the health of the Chinese economy greatly influences the value of the Australian dollar (Aud). When the Chinese economy goes well, it buys more raw materials, goods and services in Australia, which increases the demand of the AU and makes its value upload. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian dollar.
Iron mineral is the largest export in Australia, with 118,000 million dollars a year according to data from 2021, China being its main destination. The price of iron ore, therefore, can be a driver of the Australian dollar. Usually, if the price of iron ore rises, the Aud also does, since the aggregate demand of the currency increases. The opposite occurs when the price of low iron ore. The highest prices of the iron mineral also tend to lead to a greater probability of a positive commercial balance for Australia, which is also positive for the AUD.
The commercial balance, which is the difference between what a country earns with its exports and what it pays for its imports, is another factor that can influence the value of the Australian dollar. If Australia produces highly requested exports, its currency will gain value exclusively for the excess demand created by foreign buyers who wish to acquire their exports to what you spend on buying imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the commercial balance is negative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
