Today, Tuesday, during the European session, the AUD/JPY pair reached the round level of 97.00.
The yen continues to show relative weakness amid growing expectations that the Bank of Japan will not raise interest rates this year, considering the potential economic impact of newly imposed tariffs by the United States. Additional pressure on the yen stems from domestic political uncertainty in Japan and investor optimism driven by U.S. President Donald Trump's willingness to continue trade negotiations. All of this reduces the yen's appeal as a safe-haven currency and supports the pair.
After issuing tariff notifications to more than 20 countries and announcing last week a 50% tariff on copper imports, Trump softened his stance on Monday, expressing hope that trade deals could be reached before the August 1 deadline for the mutual tariffs to take effect. This eased concerns about an escalation in the global trade war and increased investor interest in risk assets, as reflected in the positive performance of equity markets and the decline in demand for safe-haven instruments.
At the same time, the Australian dollar is receiving support from strong economic data out of China. In the second quarter of 2025, China's GDP grew by 5.2% year-over-year, exceeding expectations. Industrial production in June rose by 6.8%, compared to a forecast of 5.6% and 5.8% in the previous month, while retail sales increased by 4.8% versus the expected 5.6% and May's 6.4%. Additionally, fixed asset investment from the start of the year through June rose by 2.8%.
All these factors are providing additional support to the AUD/JPY pair, suggesting that any significant downward corrections may be seen as buying opportunities and are likely to remain limited.
From a technical standpoint, oscillators on the daily chart are positive; however, the Relative Strength Index is in overbought territory, indicating potential consolidation before the next upward move.
If the price manages to firmly establish itself above the 97.00 round level, the next resistance will be at 97.35. A breakout above that level could lead the pair toward the January 2025 highs.
On the other hand, support is expected around 96.55, followed by the 96.00 round level. A drop below that level would likely accelerate further declines.
