The Australian dollar is holding steady against the yen after the Reserve Bank of Australia cut its cash rate to 3.60% on August 12—the third rate cut of 2025—citing ongoing declines in core inflation and a softening labor market. In contrast, the Bank of Japan kept its ultra-loose policy intact but signaled that a sustained rise in inflation could prompt tightening. This policy divergence underpins AUDJPY, as rate differentials favor the Aussie.
Risk sentiment has also turned supportive following news of a US–China tariff truce, easing safe-haven demand for the yen. Markets now look to Australia’s upcoming labor market report for fresh direction, with traders assessing whether further RBA cuts are on the horizon or if the central bank will pause its easing cycle.
Technical Outlook
AUDJPY is consolidating in the 96.50–96.60 range after rebounding from lows near 96.00. Moving averages and momentum indicators are aligned in a bullish configuration, with resistance at 96.75–97.00. A clear breakout above this zone could extend gains toward 97.30. On the downside, support lies at 96.00–95.90, with a break lower exposing 95.30.
1. RBA Easing & Policy Divergence
The Reserve Bank of Australia cut its cash rate to 3.60% on August 12, the third cut of 2025, highlighting ongoing core inflation declines and weak labor market trends. Meanwhile, the Bank of Japan maintained its dovish stance but signaled readiness to hike if inflation persists—underscoring significant policy divergence that supports AUDJPY.
2. Technical Picture & Market Sentiment
AUDJPY is consolidating around 96.50–96.60, following a modest rebound from lows near 96.00. Technical indicators show broad “Buy” signals across moving averages and momentum studies. The pair approaches resistance around 96.75–97.00, with support in the 96.00–95.90 zone.
3. Broader Catalysts & Risk Flow
Improving market sentiment and a US–China tariff truce have diluted the yen’s safe-haven appeal, favoring AUDJPY strength. Upcoming Australian labor data may provide the next notable catalyst for direction.
Summary
AUDJPY is on firmer footing, underpinned by RBA easing and BoJ caution. A break above 96.75–97.00 could open upside to 97.30, while a slip below 96.00 may test 95.30. Key drivers to monitor are RBA commentary, Australian labor figures, and global risk sentiment.
AUDJPY H3 Timeframe
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On this AUDJPY 3-hour chart:
Price has formed a series of lower highs while maintaining support above the 95.00–95.20 zone, creating a descending triangle structure. This pattern often signals a bearish continuation, especially when forming after a sharp drop.
The most recent rally is approaching the triangle’s descending trendline, aligning with a strong horizontal resistance zone near 96.95–97.15 (highlighted by the black box). This level also marks the origin of the last aggressive sell-off, suggesting a potential supply area where sellers could step back in.
Bearish confluences in play:
- Descending triangle structure (lower highs + flat base).
- Price approaching prior supply zone (96.95–97.15).
- The previous aggressive bearish impulse originated from the same area.
If sellers defend this resistance, a breakdown below 95.20 could trigger a sharp move toward the 94.50–94.20 demand zone, with an extended target near 93.90 if momentum accelerates.
Direction: Bearish
Target- 95.233
Invalidation- 97.422
CONCLUSION
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