Why is the Australian Dollar easing against the Japanese Yen as the RBA raises rates to 4.85% in its fifth hike this year?

• Selling pressure takes AUD/JPY towards 110.20 during Asian trading on Tuesday.
• At Tuesday’s November policy meeting, the RBA lifts its interest rate by 25 bps to 4.85%.
• The possibility of currency intervention by Japanese authorities keeps traders on heightened alert.

Selling interest in the Australian Dollar (AUD) against the Japanese Yen (JPY) nudges AUD/JPY down towards 110.20 in Tuesday’s Asian session. The pressure follows the interest rate announcement from the Reserve Bank of Australia (RBA).

Following its November monetary policy meeting, the RBA lifted the Official Cash Rate (OCR) from 4.60% to 4.85%, a widely anticipated increase of 25 basis points (bps). With its fifth rate hike of 2026, the central bank has taken the rate to its highest level in 18 years.

The Monetary Policy Board split six to three, with six members backing the increase and three favouring an unchanged OCR of 4.60%. In its statement, the board described inflation as still elevated and broad-based, warning of a growing risk that higher inflation expectations would become entrenched.

For further direction, traders will watch RBA Governor Michele Bullock’s press conference at 04:30 GMT. Hawkish remarks from Bullock could provide near-term support to the Aussie against the JPY.

The cross’s gains could be constrained by a warning of intervention from Japanese authorities. Speaking on Monday, Japan’s Finance Minister Satsuki Katayama stressed the importance of stable foreign exchange markets and said the government needed to prevent disorderly fluctuations.

Katayama had also stated last week that the government was prepared to act decisively in the currency market. Her remarks signalled that Tokyo remained vigilant over persistent JPY weakness.

At last week’s latest policy meeting, the Bank of Japan (BoJ) maintained its short-term interest rate at 1.25%, in line with market expectations.

Could another RBA hike strengthen the Aussie’s yield appeal after the inflation surprise?

The Australian Dollar is drawing support from the RBA’s policy divergence from its peers, according to strategists at Brown Brothers Harriman. They expect Tuesday’s upcoming "RBA policy decision and Statement on Monetary Policy" to bring a "second straight 25bps hike to 4.85% because inflation is materially worse than the bank assessed in August." Highlighting market pricing, they say "cash rate futures imply 83% probability of a hike," and argue that "hawkish guidance would widen AUD’s yield advantage," further underpinning the currency.

Technical Analysis: Can AUD/JPY shake off its bearish bias below the 100-day SMA?

A near-term bearish bias persists on the AUD/JPY daily chart, with spot trading beneath both the Bollinger middle band and the 100-day simple moving average (SMA). Overhead resistance from the Bollinger upper band adds to the negative tone. At around 45, the Relative Strength Index (14) points to muted momentum rather than oversold conditions, suggesting scope for additional declines.

Any recovery would first encounter resistance at 110.45, the Bollinger middle band, before facing the upper band near 111.40. Beyond these levels, the 100-day SMA at 111.90 presents a further obstacle. Support, meanwhile, lies around 109.50 at the Bollinger lower band, where selling could ease. A sustained breach of that floor would likely clear the path for further declines on the daily chart.

(The technical analysis of this story was written with the help of an AI tool. Know more.)