AUD/JPY saw a rebound on Thursday after initially facing downward pressure. The Japanese Yen (JPY) initially gained ground in the morning amid speculation of government intervention, but later retreated as the Bank of Japan (BoJ) Minutes from the March meeting revealed insights into the monetary policy outlook.
According to reports, a BoJ member suggested that a short-term rate increase to around 0.1% would likely have minimal impact on the economy. Several members also expressed the view that long-term rates should be driven by market forces, while some proposed a gradual reduction in bond purchasing and holdings by the Bank of Japan.
Meanwhile, the Australian Dollar (AUD) found support, possibly influenced by positive market sentiment following the US Federal Reserve's decision to keep interest rates steady. Fed Chair Jerome Powell's dismissal of further rate hikes contributed to the optimistic outlook. However, expectations of interest rate hikes in Australia later this year remained in focus.
Weak readings in Australia's Trade Balance and Building Permits data could exert downward pressure on the Australian Dollar, potentially dampening the hawkish sentiment surrounding the Reserve Bank of Australia's stance on maintaining higher interest rates throughout 2024.
From a technical standpoint, AUD/JPY approached the psychological level of 102.00, trading below the lower boundary of a rising wedge pattern on the daily chart. Traders may monitor the 14-day Relative Strength Index (RSI) for further direction, with key support seen around the psychological level of 100.00. A break below this level could strengthen the bearish bias, targeting April’s low at 97.78.
Immediate resistance is identified near the lower boundary of the wedge around 103.00. A rebound within the wedge could potentially enhance the bullish bias, aiming for the psychological level of 105.00 and beyond.
Paraphrasing text from "FX Street" all rights reserved by the original author.
