- The AUD/JPY attracts new sellers in reaction to the moderate rates cut of the RBA on Tuesday.
- Betting for more rise in the Boj rates in 2025 support the JPY and contribute to the fall.
- The technical configuration favors bassists and supports the prospects for greater depreciation.
The Aud/JPY crossing is under a renewed sales pressure after the modest increase of the previous day and falls to a minimum of almost two weeks during the first half of the European session on Tuesday. Cash prices currently quote around the 92.70 region, with a fall of more than 0.85% in the day, and seem vulnerable to an additional fall.
An intradic rupture and acceptance below the Fibonacci recoil level of 23.6% of the April-May Movement Validate the negative perspective. In addition, the oscillators in the daily chart have begun to gain negative traction and remain deeply in bassist territory in the 4 -hour graph. This, in turn, suggests that the path of lower resistance for the Aud/JPY crossing is down in the middle of the moderate perspective of the Australian Reserve Bank (RBA), which marks a great divergence compared to the bets for more rates of fees by the Bank of Japan (Boj).
Therefore, a certain weakness of monitoring towards the confluence of 91.95-91.75, which includes the simple mobile average (SMA) of 200 periods in the 4-hour graph and the level of 38.2% of Fibonacci, seems a different possibility. A convincing rupture below the aforementioned support should pave the path for deeper losses towards the intermediate support of 91.40 before the Aud/JPy crossing finally falls at the round level of 91.00 on the route to the 90.84 region, or the level of 50% of Fibonacci.
On the contrary, any recovery attempt could now be seen as a sales opportunity near the level of 93.00. This should limit the Aud/JPY crossing near the region of 93.50-93.60, or the level of 23.6% of Fibonacci. However, a sustained strength beyond the latter could trigger a short coverage movement and raise cash prices beyond the round level of 94.00, towards the 94.65-94.75 region on a route to the psychological brand of 95.00.
Aud/JPY 4 -hour chart
RBA FAQS
The Bank of the Australian Reserve (RBA) sets interest rates and manages Australia’s monetary policy. The decisions are made by a advice of governors in 11 meetings per year and in the necessary emergency meetings that are necessary. The main mandate of the RBA is to maintain price stability, which means an inflation rate of 2%-3%, but also “… contribute to the stability of currency, full employment and economic prosperity and the well-being of the Australian people.” Its main tool to achieve this is to raise or lower interest rates. Relatively high interest rates will strengthen the Australian dollar (AUD) and vice versa. Other RBA tools are the quantitative relaxation and hardening of monetary policy.
Although traditionally it has always been considered that inflation is a negative factor for currencies, since it reduces the value of money in general, the truth is that in modern times the opposite has happened with the relaxation of cross -border capital controls. Moderately high inflation now tends to take the central banks to raise their interest rates, which in turn has the effect of attracting more capital of world investors who are looking for a lucrative place to keep their money. This increases the demand for the local currency, which in the case of Australia is the Australian dollar.
Macroeconomic data calibrates the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in safe and growing economies than in precarious and contraction economies. A greater influx of capital increases aggregate demand and the value of the national currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment and surveys about consumer feeling can influence the AUD. A strong economy can encourage the Bank of the Australian Reserve to raise interest rates, also supporting the Aud.
The quantitative easing (QE) is a tool used in extreme situations in which to lower interest rates is not enough to restore credit flow in the economy. The QE is the process by which the Bank of the Australian Reserve (RBA) prints Australian dollars (AUD) in order to buy assets – normally State or business bonds – to financial institutions, thus providing them with the liquidity they need so much. The one usually translates into a weaker audience.
The quantitative hardening (QT) is the reverse of the QE. It is carried out after the QE, when economic recovery is underway and inflation begins to increase. While in the QE the Bank of the Australian Reserve (RBA) buys state and business bonds from financial institutions to provide liquidity, in QT the RBA stops buying more active and stops reinvesting the main one that expires of the bonds it already has. It would be positive (or bullish) for the Australian dollar.
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.
