AUD/JPY Edges Closer to 111.00 as BoJ Rate Hike Looms

The AUD/JPY cross gained traction in Thursday's early European session, pushing towards the 111.00 mark. However, its bearish bias remains intact as it trades below the 100-day Simple Moving Average (SMA). The Relative Strength Index (RSI) momentum suggests persistent downside pressure.

Elevated energy prices due to the ongoing conflict in the Middle East are weighing on the Japanese Yen against the Australian Dollar. Japan's oil-dependent economy is particularly vulnerable to these price increases, which is contributing to the AUD/JPY's upward movement.

The Bank of Japan (BoJ) monetary policy meeting on Friday will be closely watched by traders. The BoJ is expected to raise its interest rate to 1.25% from 1.0%. However, analysts at Standard Chartered warn that the central bank should avoid an overly hawkish message.

Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, noted that markets are divided on the impact of a BoJ rate hike. Some believe it will help alleviate concerns about inflation, while others see it as lifting bond yields by moving up terminal-rate bets.