The AUD/JPY pair traded higher around 101.10 in early European hours on Monday, extending its recent bullish run. The Japanese yen (JPY) came under renewed pressure against the Australian dollar (AUD) amid uncertainty over when the Bank of Japan (BoJ) might proceed with its next rate hike.
Investors also anticipate that Japan’s new Prime Minister, Sanae Takaichi, will prioritize fiscal stimulus and avoid tightening monetary policy in the near term.
RBA rate decision in focus
The Reserve Bank of Australia’s (RBA) policy announcement on Tuesday is now the key event for traders. Markets largely expect the RBA to maintain its cash rate at 3.60% during the November meeting. This stance follows a stronger-than-expected rise in quarterly inflation, which has led investors to temper earlier expectations for a rate cut.
Technical outlook
From a technical perspective, AUD/JPY maintains a bullish structure as it continues to trade above the crucial 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) sits near 65.55, reinforcing the positive bias and signaling sustained upward momentum.
Key levels to watch
On the upside, the first resistance level appears at 101.65, aligning with the upper boundary of the Bollinger Band. A decisive break above this point could open the path toward 102.30, the November 8, 2024 high. Further gains may target the next resistance at 103.12, corresponding to the July 24, 2024 high.
Conversely, initial support lies at the 100.00 psychological level. A move below this zone may expose the next downside targets at 99.74 the October 29 low and 97.84, the October 10 low.
