The AUD/JPY cross drifts lower for the third successive day on Tuesday – also marking its ninth day of a negative move in the previous ten – and drops to its lowest level since June 17 during the Asian session. Spot prices slide further below the 104.00 mark in the last hour, with bears looking to extend the recent corrective decline from the highest level since May 1991 touched earlier this month. 

Against the backdrop of a suspected intervention by Japanese authorities, expectations the Bank of Japan (BoJ) could hike rates again at its upcoming policy meeting continue to underpin the Japanese Yen (JPY). Apart from this, the US political uncertainty benefits the JPY's relative safe-haven status and exerts some downward pressure on the AUD/JPY cross. Furthermore, worries about a slowdown in the Chinese economy – the world's second-largest economy – seem to weigh on the Australian Dollar (AUD) and contribute to driving flows away from the currency pair. 

Bulls, meanwhile, failed to gain respite from unexpected interest rate cuts by the People's Bank of China (PBoC) on Monday. China's central bank lowered the one-year loan prime rate (LPR), the five-year LPR and the seven-day reverse repo rate by 10 basis points (bps) to 3.35%, 3.85% and 1.7%, respectively. This, along with expectations the US equity market could benefit from proposed Trump policies, remains supportive of the prevalent risk-on environment. This could cap any further JPY appreciation and lend some support to the risk-sensitive Aussie. 

Furthermore, bets that the Reserve Bank of Australia (RBA) could raise interest rates again, bolstered by the upbeat labor market report for June and higher May inflation print, could act as a tailwind for the Aussie. This, in turn, warrants some caution before placing fresh bearish bets around the AUD/JPY cross. Investors now look to the release of flash global PMIs on Wednesday, which will drive demand for the safe-haven JPY. Apart from this, the broader risk sentiment should contribute to producing short-term trading opportunities around the currency pair.

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