AUD/JPY Surges on BoJ Hike Odds and JPY Weakness

The AUD/JPY cross strengthened to near 113.50 in Tuesday's early European session, maintaining its positive tone above the 100-day Simple Moving Average (SMA) with bullish RSI momentum.

The Japanese Yen (JPY) weakened against the Australian Dollar (AUD) due to mounting fiscal concerns and persistent inflationary pressures, with Prime Minister Sanae Takaichi's plan to cut the consumption tax on food to 1% for two years raising market concerns about alternative revenue sources.

A Reuters report on Friday stated that the Bank of Japan is considering a rate hike as soon as September, with overnight index swaps pricing in an about 80% probability of a move by that month.