- The AUD/JPY cross remains under selling pressure, falling for a second consecutive day to reach a three-week low during the Asian session on Tuesday.
- The Reserve Bank of Australia (RBA) decided to keep its benchmark interest rates unchanged, in line with expectations, causing a downturn in the region’s currency.
- The policy statement that accompanied the RBA’s decision weighed on the Australian Dollar (AUD), amidst a softer risk tone.
The AUD/JPY pair is facing continued downward pressure, sliding for the second day in a row and reaching a three-week low during the Asian trading session on Tuesday. The decline accelerated after the Reserve Bank of Australia (RBA) announced its policy decision, pushing the pair further below the key 97.00 level.
As widely anticipated, the Australian central bank chose to maintain the Official Cash Rate (OCR) at the conclusion of the December meeting. The RBA’s policy statement noted that the monthly CPI indicator for October suggested that inflation continues to moderate, and the labor market conditions, while remaining tight, are gradually easing. This indication that further rate hikes may be on hold prompted fresh selling of the Australian Dollar (AUD).
Meanwhile, the Japanese Yen (JPY) is gaining support from growing market sentiment that the Bank of Japan (BoJ) will start tightening its ultra-loose policy and end its yield curve control measures in the early months of 2024. Additionally, the perceived risk-off sentiment, as reflected by a generally weaker tone in equity markets, is seen as another factor benefiting the JPY’s relative safe-haven status against the higher-risk Australian Dollar. These factors contribute to the downward trend seen in the AUD/JPY pair.
Technical levels to watch
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