The AUD/JPY cross failed to build on its modest rebound from the 93.00 level—a two-week low—on Tuesday, trading in a narrow range during the Asian session. Spot prices remained steady around 93.70, showing little movement following the Reserve Bank of Australia‘s (RBA) policy announcement.
RBA Holds Rates, Signals Caution on Inflation
As widely anticipated, the RBA kept its Official Cash Rate (OCR) unchanged at 4.1% in its April monetary policy meeting. The central bank maintained a cautious tone, emphasizing that bringing inflation sustainably back to target remains a top priority. While acknowledging the continued decline in underlying inflation, the RBA reiterated that monetary policy remains restrictive, leaving room for a potential rate cut in May.
Trade Uncertainty and Yen Strength Limit AUD Gains
Persistent concerns over U.S. President Donald Trump’s aggressive trade policies and their broader economic impact continued to weigh on the Australian Dollar (AUD). Meanwhile, renewed buying interest in the Japanese Yen (JPY) further capped the upside for AUD/JPY.
The latest Tankan survey from the Bank of Japan (BoJ) revealed that Japanese enterprises have raised their inflation expectations for one, three, and five years ahead. This supports the case for additional BoJ rate hikes, reinforcing the JPY’s strength.
Traders Await U.S. Tariff Announcement
With markets on edge ahead of Trump’s planned “reciprocal tariffs” announcement at 19:00 GMT, traders are exercising caution, refraining from aggressive directional bets. Given the current fundamental backdrop, the AUD/JPY cross remains vulnerable to further downside, with any intraday gains likely to be viewed as selling opportunities.
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