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AUDJPY Hits Resistance – Will the RBA Surprise Markets Tomorrow?

AUDUSD Australian dollar

The AUDJPY pair has retreated from resistance as the Reserve Bank of Australia gets ready to announce its latest interest rate decision. The RBA meets on Tuesday with traders expecting the bank to hold firm on the current 0.25% lending rate.

Analysts have priced in a 40% chance of a rate cut to 0.10 per cent, while the central bank’s shadow board from the Australian National University is seeing only a 23% chance of a rate change.

Traders are maybe getting complacent ahead of the RBA’s decision with inflation rates in the sub-zero level and an employment rate that dropped from 7.5% to 6.8%. The RBA has been focused on the employment rate from early in the year and with central banks around the globe having rates at the zero bound, Australia is an exception at 0.25%. A rate cut to 0.2% would be a surprise to markets but the data supports it.

The Bank of Japan Governor Haruhiko Kuroda warned today that the country’s recovery may be slow. Kuroda said:

“There is very high uncertainty on the economic and price outlook. Risks are skewed to the downside”.

AUDJPY Technical Outlook

The AUDJPY pair has rallied to test the 76.00 level but has met resistance. There is now a possibility that the price will retreat and test the 74.00 support. A close above 76.00 would see higher prices and the 50-day moving average will be the first test at 76.25. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.  

AUDJPY Daily Chart