AUD/JPY Plummets as BoJ Rate Hike Looms
The AUD/JPY cross is currently trading near 110.70 in the early European session on Wednesday, with a bearish bias below the 100-day Simple Moving Average (SMA). Analysts expect the Bank of Japan to announce a 25-basis-point interest rate hike at its upcoming policy meeting on Friday, which would be the highest borrowing costs for Japan since April 1995.
According to OCBC Group Research analysts, 'We expect the BoJ to hike 25 bps at the upcoming meeting on 16-17 September.' They also predict two additional hikes of 25bps in 2027. However, traders will closely monitor BoJ Governor Kazuo Ueda's speech about the pace of future rate hikes and how far the central bank could take rates under the current tightening cycle.
A hawkish message from Ueda could boost the JPY and act as a headwind for the cross in the near term. On the technical side, AUD/JPY maintains a bearish near-term bias as it holds below the 100-day SMA and the Bollinger middle band. The Relative Strength Index (RSI) at 36.04 stays close to oversold territory.