The Australian Dollar is pushing higher against the Japanese Yen in early European trading Tuesday, with the AUD/JPY cross climbing above 113.50 to trade around 113.85. The rally extends the pair’s bullish momentum as it continues holding above the key 100-day simple moving average, a technical level closely watched by currency traders.
The Aussie’s strength stems primarily from widening interest rate differentials between the Reserve Bank of Australia and the Bank of Japan. While the RBA maintains relatively elevated rates to combat inflation, the BoJ continues its ultra-loose monetary policy, creating a favorable environment for carry trades that favor the higher-yielding Australian Dollar.
This divergence in central bank policy continues to provide structural support for AUD/JPY bulls, making downside moves attractive buying opportunities for traders positioned for further gains.
FXnCO Insight
Traders should monitor AUD/JPY’s technical support at the 100-day SMA, as sustained trading above this level signals continued bullish momentum driven by favorable rate differentials.
Source: FXStreet