AUD/JPY Bounces Off Daily Low, Trades With Mild Negative Bias Around 91.00 Mark

By Haresh Menghani of FX Street

Thursday, April 24, 2025 7:10 AM EDT

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AUD/JPY drifts lower on Thursday amid reviving demand for the safe-haven JPY.
Hopes for a US-Japan trade deal and BoJ rate hike bets further underpin the JPY.
A positive risk tone lends support to the Aussie and helps limit losses for the pair.

The AUD/JPY cross struggles to capitalize on the previous day's strong move up to the 91.60 area or a nearly three-week high, and attracts some sellers on Thursday. Spot prices, however, trim a part of modest intraday losses and trade around the 91.00 mark during the first half of the European session, down 0.30% for the day.

The latest optimism over a quick resolution to the US-China trade standoff faded rather quickly after US Treasury Secretary Scott Bessent's remarks on Wednesday, which, in turn, drives some safe-haven flows towards the Japanese Yen (JPY). Apart from this, hopes for a US-Japan trade deal and the growing acceptance that the Bank of Japan (BoJ) will hike interest rates further in 2025 underpin the JPY. This, in turn, is seen as a key factor acting as a headwind for the AUD/JPY cross.

Meanwhile, traders have been pricing in the possibility of another 25 basis points (bps) interest rate cut by the Reserve Bank of Australia (RBA) in May. This marks a big divergence in comparison to hawkish BoJ expectations, which further contributes to the Australian Dollar's (AUD) relative underperformance and weighs on the AUD/JPY cross. That said, a generally positive tone around the equity markets caps the JPY and lends support to the perceived riskier Aussie.

US President Donald Trump backed off from threats to fire Federal Reserve (Fed) Chair Jerome Powell following the intense criticism for not cutting interest rates. Adding to this signs of easing trade tensions between the US and China – the world's two largest economies – remain supportive of the upbeat market mood. This is holding back the JPY bulls from placing aggressive bets and acting as a tailwind for the AUD/JPY cross, warranting some caution for bearish traders.

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