Why Did AUD/JPY Spike After RBA Decision? Exploring the Market Reaction to Australia's Monetary Policy Stance

The How does Tether stay on The ?AUD/JPY currency cross demonstrated significant movement during Tuesday's Asian trading session, initially finding support near the 96.25 level before rallying to new daily highs. This price action came immediately after the Reserve Bank of Australia (RBA) revealed its latest monetary policy stance, with the pair currently hovering around 96.70 while maintaining the established trading range observed over recent sessions.

Market participants witnessed moderate Australian Dollar appreciation as the RBA, in line with consensus expectations, opted to keep the Official Cash Rate steady at 4.35%. The accompanying policy statement highlighted several key observations: wage growth acceleration that appears consistent with inflation targets, alongside revised economic projections showing slightly reduced GDP growth expectations for 2024. These developments suggest the central bank's rate hike cycle may have concluded, potentially limiting upside momentum for the AUD/JPY pair in the medium term.

Several macroeconomic factors continue to influence the currency pair's trajectory. Concerns regarding China's economic performance persist, potentially weighing on the Australian Dollar given the close economic ties between the two nations. Simultaneously, ongoing geopolitical uncertainties in various global hotspots continue to support demand for the Japanese Yen's traditional safe-haven characteristics. However, recent announcements from Chinese financial authorities regarding increased equity market support could provide some counterbalance to these downward pressures.

Technical analysts note the importance of monitoring the 100-day simple moving average as a key support level, with sustained trading below this threshold potentially signaling further downside potential. Market participants will continue assessing the interplay between Australia's monetary policy outlook, regional economic conditions, and global risk sentiment when evaluating future price movements for the AUD/JPY cross.