AUD/JPY gathers strength to shift business above 90.00 ahead of Australian Inflation

• AUD/JPY is gathering strength to confidently reclaim the critical resistance of 90.00.
• Further softening of Australian inflation is highly expected as RBA policymakers confirmed signs of a slowdown ahead.
• BoJ Ueda is expected to keep the expansionary interest rate policy steady as Japan’s inflation is showing signs of a peak.

The AUD/JPY pair has witnessed a mild correction after failing to decisively surpass the critical resistance of 90.00 in the early Tokyo session. The risk barometer is making efforts for shifting its auction confidently above 90.00.

Considering positive cues from AUD/USD, the AUD/JPY pair is expected to remain in the grip of bulls. The Australian Dollar is expected to remain volatile ahead of the release of the Consumer Price Index (CPI) data, which is scheduled for Wednesday.

As per the consensus, quarterly inflation (Q1) accelerated by 1.3% at a slower pace than the velocity of 1.9% recorded in the last quarter of CY2022. Annual inflation is expected to soften to 6.9% from the former release of 7.8%.

Apart from them, the monthly inflation indicator (Mar) is expected to decelerate to 6.6% from the prior release of 6.8%. Australia’s monthly CPI has softened significantly from its peak of 8.4%, recorded in December. The Reserve Bank of Australia (RBA) has paused its rate-hiking spell after pushing interest rates to 3.60%. RBA policymakers are expecting a further slowdown in the Australian economy, which will continue to weigh pressure on inflation.

On the Japanese Yen front, the interest rate decision by the Bank of Japan (BoJ) will be the key event this week. New BoJ Governor Kazuo Ueda is expected to keep the expansionary interest rate policy steady as Japan’s inflation is showing signs of peak knowing the fact that the impact of higher import prices has already passed to the economy. BoJ Ueda denied tweaking Yield Curve Control (YCC) sooner on Monday, citing that inflation is losing its momentum.