The AUD/JPY currency pair traded flat around 110.40 during early European hours on Wednesday, reflecting subdued market momentum following recent comments from Bank of Japan (BoJ) Governor Kazuo Ueda [1]. Governor Ueda stated that the BoJ would 'assess the likelihood and risks of the baseline economic and price outlook being realized' when considering the pace and timing of future rate hikes, a stance interpreted by markets as less hawkish than previously anticipated [1].
Market expectations for a BoJ rate hike at the October monetary policy meeting have diminished, with the probability dropping to nearly 12%, down from as high as 40% early last week, according to Bloomberg data cited in the article. However, the odds for a rate hike by the December meeting have surged to around 90% [1]. Analysts at Rabobank noted that the BoJ appears to be shifting its focus toward stabilizing price pressures around its target level, but emphasized that the market does not widely expect back-to-back rate increases at this stage [1].
Rabobank further highlighted that Governor Ueda reiterated the intention to 'continue raising the policy interest rate,' while describing the Japanese economy as growing 'moderately.' This combination of moderate growth and cautious signaling has reinforced market expectations that rapid or consecutive rate hikes are unlikely in the near term [1].
From a technical perspective, AUD/JPY maintains a bearish near-term outlook, trading below the 100-day simple moving average (SMA) and the upper Bollinger Band. The Relative Strength Index (RSI) stands at 43.37, indicating subdued upside momentum. Key support levels are identified at 110.00, 109.67, and 109.10, with a decisive break below potentially exposing the October 1 low of 108.71. On the upside, resistance is seen at 110.60, 112.11, and the 100-day SMA at 112.50 [1].
CONCLUSION
AUD/JPY remains under pressure as the BoJ signals a cautious approach to future rate hikes, dampening expectations for rapid policy tightening. Technical indicators point to a lingering bearish bias, with key support and resistance levels in focus. Market participants are likely to monitor upcoming BoJ communications and economic data for further direction.