AUD/JPY Sees 0.50% Gain on Diverging RBA and BOJ Policies

In the last session of the week, the AUD/JPY pair rose to 97.409, marking a 0.50% increase. The primary driver behind this upward movement is the contrasting monetary policies of the Reserve Bank of Australia (RBA) and the Bank of Japan (BOJ), favoring the Australian Dollar.

Daily chart indicators signal a strong buying momentum, although four-hour indicators suggest the possibility of overbought conditions. Despite this potential correction, the overall trend remains bullish.

The RBA Governor Bullock recently indicated a balanced perspective on interest rates, leaving room for potential adjustments based on inflation and economic growth. Market expectations lean towards a rate cut by the RBA in August, with further easing anticipated throughout the year.

Conversely, the BOJ maintains a dovish stance, with Governor Ueda suggesting continued accommodative financial conditions. Rate liftoff from the BOJ is forecasted for June, with minimal tightening expected for the remainder of 2024.

Technical analysis reveals a positive trajectory in the Relative Strength Index (RSI) and diminishing red bars in the Moving Average Convergence Divergence (MACD) histogram, indicating buyer control. The pair remains above key Simple Moving Averages (SMAs), emphasizing bullish sentiment across larger time frames.

AUD/JPY daily chart

Moving to the four-hour chart, the momentum switches somewhat. Key performance indicators have approached overbought levels, suggesting an imminent correction. A closer look at the RSI confirms this forecast as it ventures into overbought territory. The MACD confirms this pattern as well, with its green bars gradually shrinking. In summary, whilst the bulls seem to be gaining ground currently, an impending correction looms as short-term momentum indicators align to suggest a pullback.

AUD/JPY