The AUD/JPY currency pair softened to about 100.50 during early European trading on Tuesday. However, there is still a positive outlook as indicated by the bullish RSI. Immediate resistance is seen at 101.65, while a key downside target is around 100.00. The Australian Dollar is struggling against the Japanese Yen after the Reserve Bank of Australia decided to keep the Official Cash Rate steady at 3.6%. This decision came after inflation figures for the September quarter were higher than expected. From a technical perspective, AUD/JPY is holding steady above the 100-day Exponential Moving Average on the daily chart. The 14-day Relative Strength Index reflects bullish momentum at 61.65. The first notable resistance is at 101.65; if surpassed, the pair could rise to 102.30, with the next target at 103.12. However, if the price falls below the 100.00 mark, it may retreat to 99.74 and then to 97.84. The value of the Australian Dollar is influenced by interest rates set by the Reserve Bank of Australia, as well as factors like iron ore prices and the state of the Chinese economy. Changes in interest rates and events in China can directly affect the currency’s value. The price of iron ore and Australia’s trade balance also play significant roles in the demand for the AUD. With the Reserve Bank keeping rates at 3.6%, the AUD/JPY remains around the 100.50 mark. The technical indicators suggest a bullish sentiment, with the price firmly above the 100-day exponential moving average. This stable foundation opens opportunities for strategies that could benefit from a gradual increase or a definitive breakout in the upcoming weeks. Given the strong support at the 100.00 level, one strategy could be to sell cash-secured puts with a strike price just below this, possibly at 99.50. This method allows us to collect premium while maintaining a bullish structure. The Reserve Bank’s decision not to cut rates, which some anticipated earlier in 2025, adds strength to this position. Adding to the positive outlook is the health of China, Australia’s largest trading partner. Recent data shows that China’s Caixin Manufacturing PMI came in at 50.9, exceeding market expectations and signaling slight growth in the manufacturing sector. This is a good sign for demand for Australian resources and boosts the Aussie dollar. We are also seeing stability in key commodity prices, as iron ore futures consolidate around $120 per tonne. This is a notable recovery from the sub-$100 levels seen during a brief dip in late 2024. This price stability significantly supports Australia’s trade balance and, in turn, the AUD. For traders looking to capitalize on a move past the immediate resistance at 101.65, buying call options presents a direct bullish strategy. A breakthrough at this level could drive the pair quickly toward the November 2024 high of 102.30. A cost-effective approach is to use a bull call spread by buying a 101.50 call and selling a 102.50 call, effectively targeting this specific move while managing risk.

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