Asian Intervention Rattles Dollar as BOJ Hike Looms

Asian foreign exchange authorities have intervened in the market, likely in coordination with South Korean and US authorities, to support the Japanese yen. This move has led to broad-based US dollar weakness, which has benefited the Australian and New Zealand dollars.

The intervention, combined with softer-than-expected US economic data and strong earnings from Microsoft and Amazon, has driven a surge in risk appetite and contributed to the Aussie and Kiwi's outperformance.

Traders are now looking ahead to the Bank of Japan policy decision later today, which could have significant implications for the yen and the broader currency market. There is an increased risk of a surprise rate hike from the BOJ, which would likely lead to sharply lower USD/JPY and potentially broader US dollar weakness.

The technical picture for AUD/USD is bullish, with the pair breaking above resistance at 0.7020 and clearing the 50-day moving average. This opens up potential for a run towards 0.7200, but traders should be cautious of a pullback to the lower boundary of the triangle structure around 0.6975 if AUD/USD slips back below 0.7020.