AUD/JPY Slips Below 111 as Yen Strengthens on Rate-Rise Bets
The AUD/JPY currency pair has slipped below 111 as the yen strengthens on expectations of a near-term Bank of Japan rate rise. A Reuters poll pointed to the policy rate reaching 1.25% at the September meeting and then 1.75% in Q2 2027, with BoJ board member Kazuyuki Masu warning that inflation could force rapid rate increases.
The cross remains capped beneath the 100-day moving average and the Bollinger Bands' 20-period SMA, keeping the near-term tone bearish as RSI (14) sits around 33 in oversold territory. Derivative traders are advised to position for further downside in the AUD/JPY cross over the coming weeks by buying put options or establishing short futures contracts.
The shifting interest rate landscape is driving a bearish outlook, as recent market polling indicates the Bank of Japan could raise rates faster than expected to combat rising domestic inflation risks. Policymakers are hinting at aggressive back-to-back interest rate hikes, which could lead to extreme volatility reminiscent of the July 2024 carry-trade unwinding.