AUD/JPY Pair Eyes Breakout Above ¥113 as RBA Rate Hikes Loom

The Australian dollar has been steadily gaining ground against the Japanese yen in recent trading sessions. This trend can be attributed to the differing monetary policies of their respective central banks, with the Reserve Bank of Australia (RBA) expected to raise interest rates further and the Bank of Japan (BOJ) having recently hiked its policy rate to 1.25%.

Despite this, the BOJ's decision was met with two dissenting votes from its policymakers, which has somewhat diminished the credibility of their tightening signal. This has led to a decrease in the Japanese yen's value, making it a less attractive investment opportunity.

The Australian dollar has been buoyed by a combination of falling oil prices and stronger global equities, both of which are contributing to an increase in risk-sensitive currencies. The AUD/JPY pair is currently trading in a fair-value area, with many analysts expecting it to break above the ¥113 resistance level if the upward trend continues.

However, support levels remain near ¥110, with the 200-day EMA providing additional backing for any potential pullbacks. As Christopher Lewis, a technical analyst at DailyForex, notes, 'pullbacks at this point in time, I suspect, still have plenty of support near ¥110,' indicating that investors should be cautious before making any significant trades.