The AUD/JPY pair has managed to regain a few pips from its low during the Asian session and is presently trading just below the key 99.00 level, showing little change for the day.
The Australian Dollar (AUD) faced some selling pressure following the release of official data indicating a 3.4% year-on-year increase in domestic consumer inflation for February, slightly below expectations of a rise to 3.5%.
However, market reaction was short-lived as investors increasingly anticipate any potential interest rate cuts by the Reserve Bank of Australia (RBA) to occur in the latter part of the year. This, coupled with the prevailing downward bias surrounding the Japanese Yen (JPY), has prompted some buying interest in the AUD/JPY pair around the 98.75-98.70 zone.
Despite the historic rate hike for the first time since 2007, the Bank of Japan (BoJ) maintained a dovish stance at the conclusion of its March meeting, refraining from providing guidance on future policy measures or the pace of policy normalization.
Furthermore, the BoJ signaled its intention to uphold accommodative monetary policy for an extended duration, exerting downward pressure on the JPY and lending support to the AUD/JPY pair. However, upside potential appears constrained amid speculation of potential intervention by authorities to curb further weakness in the JPY.
Japan's Finance Minister Shunichi Suzuki reiterated the possibility of implementing decisive measures in response to disorderly movements in foreign exchange markets.
This statement follows earlier remarks by Japan's top currency diplomat, Masato Kanda, who characterized recent currency movements as speculative and emphasized that the current weakness in the JPY is not reflective of underlying fundamentals. Consequently, caution is advised for bullish traders as they position themselves for potential appreciation in the AUD/JPY pair in the near term.
Paraphrasing text from "FX Street" all rights reserved by the original author.
