The AUD/JPY currency pair is experiencing a downward trend, with prices falling towards 114.00. This decline is primarily attributed to the Japanese Yen's resilience, which has been bolstered by the Bank of Japan's (BoJ) recent monetary policy decisions. The BoJ's decision to gradually unwind its ultra-loose monetary policy, coupled with interest-rate cuts in other major central banks, has narrowed the differential between the 10-year US and Japanese bonds, favoring the US Dollar against the Japanese Yen. This shift in policy has also made the Yen a more attractive safe-haven investment during times of market stress. As a result, the AUD/JPY pair is facing downward pressure, with immediate support at the 20-day SMA near 113.70 and further cushions at the lower Bollinger Band around 112.78. In contrast, the Reserve Bank of Australia (RBA) has scaled back expectations for immediate interest rate hikes, with financial markets pricing in a nearly 93% chance of holding the Official Cash Rate (OCR) steady at its June policy meeting. This decision has weighed on the Aussie, further contributing to the downward pressure on the AUD/JPY pair. The technical analysis suggests a constructive bullish bias, with the pair consolidating just under the upper Bollinger Band. However, a break below the 100-day EMA near 110.77 would undermine the prevailing bullish structure. Overall, the AUD/JPY pair is expected to continue its downward trend, with the Japanese Yen's resilience and the RBA's cautious approach to interest rate hikes as key factors.
