AUD/JPY jumps to two-month high above 92.00 on RBA’s surprise 0.25% rate hike

• AUD/JPY takes the bids to refresh multi-day top, rising for the fourth consecutive day on RBA’s move.
• RBA defies market forecasts of keeping benchmark rate unchanged, lifts OCR to 3.85%.
• Downbeat Aussie inflation expectations, mixed sentiment challenge risk-barometer pair.
• BoJ versus RBA divergence can keep pair buyers hopeful.

AUD/JPY rallies to the highest levels since early March, up 1.10% intraday near 92.15 early Tuesday as the Reserve Bank of Australia (RBA) board members decided to lift the Official Cash Rate (OCR) by 0.25% to 3.85%. In doing so, the cross-currency pair also cheers upbeat economic forecasts from the Australian central bank amid dovish Bank of Japan (BoJ) bias.

Not only does the RBA announce a 0.25% rate hike but the Aussie central bank also expects further tightening of the monetary policy. That said, the RBA also revised its inflation and Gross Domestic Product (GDP) forecasts in the latest policy document.

Also read: RBA: Board expects that some further tightening of monetary policy may be needed

Apart from the RBA moves, the BoJ’s preference for the easy money policy and cautious optimism after the First Republic Bank actions add strength to the AUD/JPY pair’s upside momentum.

Against this backdrop, S&P 500 Futures track Wall Street’s indecisiveness near 4,180, retreating from a three-month high, whereas the US 10-year and two-year Treasury bond yields ease from a one-week high to 3.55% and 4.13% at the latest.

Having witnessed the initial reaction to the RBA’s surprise move, AUD/JPY pair traders may keep their eyes on the risk catalysts for clear directions. Among them, headlines surrounding the US debt ceiling expirations and the US-China tension will be crucial to watch.

Technical analysis

A clear upside break of the downward-sloping resistance line from late October 2022, around 91.40 by the press time, directs AUD/JPY buyers toward February’s high of around 93.05.