AUD/JPY Retreats as RBA Delivers Fifth Hike of the Year

Key Moments

RBA Hike Weighs on AUD/JPY

The AUD/JPY pair drifts lower toward 110.20 during Asian trading on Tuesday as the Australian Dollar comes under selling pressure against the Japanese Yen following the Reserve Bank of Australia’s policy announcement.

The RBA raises its Official Cash Rate to 4.85% from 4.60% after concluding its November monetary policy meeting, in a move that had been broadly anticipated. The 25 basis point increase is the fifth rate hike of 2026 and takes the policy rate to its highest level in 18 years.

Within the Monetary Policy Board, six members support the rate increase, while three members vote to keep the OCR unchanged at 4.60%. In its statement, the board notes that inflation remains elevated and broadly based and warns of a growing risk that higher inflation expectations could become entrenched.

Market participants are now focused on Governor Michele Bullock’s press conference scheduled for 04:30 GMT. Any signal perceived as more hawkish could provide some support to the Australian Dollar against the Yen in the near term.

Japanese Intervention Risks Temper Upside

Prospects of official action from Tokyo continue to limit gains in AUD/JPY. Japanese policymakers have reiterated their concern about excessive volatility in the foreign exchange market and the need to avoid disorderly moves.

Japan’s Finance Minister Satsuki Katayama said on Monday that it is crucial to maintain stable foreign exchange markets and that the government needs to avoid chaotic fluctuations. Last week, Katayama also said that the government stood ready to take decisive action in the currency market, indicating that ‌Tokyo has not lowered its guard against persistent weakness in the JPY.

The Bank of Japan, for its part, leaves the short-term policy rate unchanged at 1.25% at its latest meeting held last week, in line with market expectations.

Strategists’ View on RBA Policy and AUD Yield Advantage

Strategists at Brown Brothers Harriman highlight that the upcoming “RBA policy decision and Statement on Monetary Policy” on Tuesday is expected to deliver a “second straight 25bps hike to 4.85% because inflation is materially worse than the bank assessed in August.” They note that “cash rate futures imply 83% probability of a hike,” and add that “hawkish guidance would widen AUD’s yield advantage,” reinforcing support for the Australian Dollar as the RBA’s stance diverges from its peers.

Technical Picture: Bearish Bias Below the 100-day SMA

From a technical standpoint, AUD/JPY maintains a bearish short-term tone on the daily chart as spot trades beneath both the middle line of the Bollinger Bands and the 100-day simple moving average. The upper Bollinger Band is also acting as a cap, underlining the downside bias, while the 14-day Relative Strength Index sits around 45, indicating weak momentum but not oversold conditions, which leaves scope for further declines.

On the upside, the first notable barrier sits at the Bollinger middle band near 110.45, followed by the upper band close to 111.40, while the 100-day SMA at 111.90 is viewed as a more formidable obstacle to any sustained rebound. On the downside, support is seen at the lower Bollinger Band around 109.50, where selling pressure could temporarily ease. A clear break below this area, however, would likely pave the way for further weakness on the daily time frame.