AUD/JPY Price Forecast: Flatlines above 110.00, bearish outlook persists
The AUD/JPY cross trades on a flat note around 110.20 during the early European trading hours on Tuesday. Markets might turn cautious ahead of the Bank of Japan (BoJ) interest rate decision later on Friday.
AUD/JPY remains flat around 110.20 during early European trading on Tuesday, with caution expected as the Bank of Japan (BoJ) prepares its interest rate decision later on Friday. The BoJ is projected to hike its policy rate to 1.25%, the highest level in about 31 years, at its September meeting. The Bank of Japan has recently raised its benchmark rate to 1.0% in June.
Traders will focus on BoJ Governor Kazuo Ueda's comments regarding future rate hikes and the extent of this tightening cycle. Analysts note that a 25 basis points increase is already priced in, and for the yen to strengthen further, the BoJ would need to indicate a commitment to a faster pace of hikes. Meanwhile, a hawkish stance from the Reserve Bank of Australia (RBA) could support the Australian Dollar (AUD), which has nearly a 76% chance of a rate hike to 4.60% at the next meeting, according to the RBA Rate Tracker.
The Bank of Japan is expected to raise rates by 25 basis points to 1.25% on Friday, given Japan's underlying inflation is near the 2% target and the economy is operating above capacity. Further hikes cannot be ruled out, potentially driving the 10-year US and Japanese bonds differential down, which would support the US Dollar against the Japanese Yen.
AUD/USD is on the back foot near 0.7150, near a three-week low, while USD/JPY is heading towards 155.00 as traders await the FOMC and BoJ meetings.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
