AUD/JPY rallies 75-pips on RBA’s more-than-expected rate hike

  • AUD/JPY justifies RBA’s hawkish action while taking bids to refresh intraday high.
  • RBA crosses wide market forecasts with a 25 bps rate hike to 0.35% benchmark rate.
  • Off in Japan restricts bond moves, favoring cautious optimism ahead of top-tier events.
  • Risk catalysts will be important to determine near-term directions, FOMC is the key.

AUD/JPY jumps around 75 pips on the Reserve Bank of Australia’s (RBA) higher-than-expected rate lift on Tuesday. The cross-currency pair printed the heaviest daily performance in a week with 112% intraday gains around 92.80 by the press time.

That said, the RBA surprised bulls by crossing the 15 basis points (bps) of market forecasts with a 25 (bps) increase in the benchmark rate to 0.35% during the latest move to tame the inflation.

Read: Breaking: RBA lifts OCR by 25bps to 0.35%, AUD/USD storms through 0.7100

Also supporting the Australian Dollar (AUD) are the comments from the RBA statement like, “The economy has proven to be resilient, and inflation has increased faster and to a higher degree than predicted.”

Having witnessed an initial reaction to the RBA’s hawkish move, AUD/JPY buyers will closely examine the risk catalysts for fresh impulse. However, a holiday in Japan and China can challenge the pair traders, which in turn also allows the bulls to keep the reins.

Even so, Wednesday’s US Federal Reserve (Fed) monetary policy meeting becomes the key catalyst amid hopes of the 0.50% rate hike and balance-sheet normalization.

Technical analysis

AUD/JPY bulls need a successful break of the 200-SMA resistance near 92.30 to aim for the downward sloping trend line from April 21 and the 100-SMA, respectively around 92.80 and 93.15. Failure to do so can drag the quote to the weekly support line near 91.60.

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