The RBA is in a hawkish hold mode, with sticky services inflation and a tight labor market keeping rate cuts off the table in the near term.

Meanwhile, the Bank of Japan is cornered between rising yields and a weakening yen, with FX intervention risks growing but still no clear tightening signal beyond symbolic moves.

This policy divergence favors AUD strength over JPY, especially as Australia maintains positive real rates.

Despite short-term volatility, global equity markets are still near highs, and commodity prices are stabilizing.

AUD/JPY is a classic pro-risk pair: it rallies when sentiment stabilizes and reflation trades emerge — which appears to be the case as markets digest Trump’s tariff threats with less panic than in 2019.

Price held the 103.50 support zone, forming a short-term higher low.

AUD/JPY is showing signs of resuming its medium-term uptrend, with RSI diverging positively on 4H and daily charts.

A break above 104.50 would open the way to 106.00+, especially if Japanese yields remain suppressed.

Iron ore and coal prices have seen mild rebounds, which historically correlate positively with AUD performance.

AUD tends to gain when there’s global demand optimism for raw materials and with China hinting at further stimulus, AUD stands to benefit

LONG AUDJPY

May 26 2025