I’ve taken a short position on AUD/JPY as I see a clear divergence setting up between the two currencies.

JPY has been gaining momentum today, benefiting from cautious risk sentiment and supportive comments from Japanese officials, including the Finance Minister and a BoJ member. Markets are backing away from the idea of aggressive yield curve control, which gives the yen more breathing room to appreciate. 

Meanwhile, AUD is underperforming across the board. With no fresh catalysts from Australia and muted commentary from the RBA, there's little to support a rebound. The Aussie looks vulnerable in the current environment. 

Looking at the broader picture, the global mood remains cautious, which tends to favor defensive currencies like the yen. With Japan’s CPI data due soon, any upside surprise could further lift JPY if traders start to reassess BoJ policy expectations.

I’ve positioned early to potentially catch the move if this theme continues to play out.

SHORT AUDJPY

May 22 2025