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AUD/JPY is trading in positive territory in Tuesday’s Asian session, up 0.22% on the day. The RBA decided to keep interest rates on hold at 4.35% at its November meeting on Tuesday. But US presidential election uncertainty could cap further upside for the cross.
The AUD/JPY cross gained traction to near 100.40 during the Asian trading hours on Tuesday. The Australian Dollar rose higher after the central bank meeting.
According to the RBA Monetary Policy Statement, board members will continue to rely upon the upcoming data and the evolving assessment of risks. Policymakers further stated that monetary policy will need to be sufficiently restrictive until the central bank is confident that inflation is moving sustainably toward the target range.
RBA President Michelle Bullock said that inflationary risks remain on the upside, and that reducing inflation isn’t an easy task.
Following the meeting, the odds of an RBA rate cut in December faded, with most bets pointing to April or May.
However, the uncertainty surrounding the US presidential election may limit the cross’s upside and strengthen safe-haven currencies like the Japanese Yen (JPY).
The Yen could also find support from less dovish comments from the Bank of Japan, with a rate hike potentially being priced in at the start of next year.
TECHNICAL ANALYSIS
Source: TradingView
Price has rebounded and formed a strong demand zone since the August 5 low. Price formed higher lows and higher highs and has moved above the 100 EMA which established a strong uptrend.
The uptrend seemed to run out of steam after reaching the 101 level and then started to range. Price appears to have stabilized, ranging between the pivot line at 100 and the resistance line at 101.7.
However, if it fails to hold, we could see it drop below the pivot line, forming a support level near 98. This could create a double bottom with the September 30 level, potentially helping the price regain ground depending on upcoming fundamental data.
