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AUD/JPY gains ground for the third successive session, trading around 105.20 during the European hours on Tuesday. The currency cross reached 105.37, a fresh high since July 2024, during the earlier trading hours.

The risk-sensitive Australian Dollar (AUD) receives support against the safe-haven currencies including the Japanese Yen (JPY) amid increasing risk-on sentiment, which could be attributed to easing concerns about a broader United States (US)-Venezuela tensions. Traders await Australia's November Consumer Price Index (CPI) release due on Wednesday.

The AUD also finds support following a recent survey of leading economists cited by the Australian Financial Review (AFR), which suggests the Reserve Bank of Australia (RBA) may not be done tightening this cycle. The poll indicates inflation is expected to remain stubbornly elevated over the coming year, fueling expectations of at least two additional rate hikes.

The upside of the AUD/JPY cross could be limited as the Japanese Yen (JPY) could gain ground amid rising odds that the Bank of Japan (BoJ) will continue raising interest rates this year. BoJ Governor Kazuo Ueda said the central bank will adjust interest rates as economic conditions and prices develop in line with its projections. Ueda also said the economy is likely to maintain a virtuous cycle of moderate, simultaneous wage and price increases.

Traders may adopt caution amid fiscal concerns over Prime Minister Sanae Takaichi’s large-scale spending plans to spur growth. Attention also remains on potential currency intervention, as business leaders have urged the government to address the Yen’s weakness.

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