**Recent Economic Data and BoJ Outlook** The current market shows a strong bullish signal with an RSI above 58.10, and the prices are above the 100-day EMA. If the price exceeds the resistance of 101.75, we might see more upward movement. However, if it drops below 100.00, we could see the price fall to around 98.97. The Japanese Yen’s value relies on Japan’s economic health, the policies of the Bank of Japan (BoJ), and the difference between Japanese and US bond yields. During uncertain times, the Yen often acts as a safe haven, which can cause its value to rise. Currently, AUD/JPY is around 100.85, highlighting a distinct difference in economic trends that will affect trading strategies in the near future. The Australian dollar benefits from a strong economy, while the Japanese Yen struggles due to a recent economic downturn. This difference suggests that the pair may continue to rise. **Policy Divergence and Trade Strategy** Recent data supports this view. The Australian Bureau of Statistics confirmed on November 13 that the unemployment rate stayed low at 4.1%, which was better than expected and allows the Reserve Bank of Australia to keep its rates hawkish at 4.35% earlier this month. In contrast, Japan’s economy shrank by an annualized 1.8% in the third quarter, much worse than anticipated. This has nearly wiped out expectations for a rate hike from the Bank of Japan in December. This difference in policy creates a favorable environment for AUD/JPY. For traders, a bullish outlook is advisable as long as the price remains above the 100-day EMA. Buying call options with strike prices over the 101.75 resistance could be effective in anticipating a rise towards 102.30, the high from November 2024. The bullish RSI near 58.10 indicates there is still potential for upward movement. However, we must be cautious of the significant 100.00 level. A break below this support could invalidate the bullish case. To safeguard against this, purchasing put options with a strike around 99.50 could help protect against a sharp decline towards the recent low of 98.97 on November 7. The overall market conditions also favor a higher AUD/JPY, as global risk sentiment remains stable with the VIX index close to a low 15. This reduces the allure of the Japanese Yen as a safe-haven asset. As long as market volatility stays low, this will likely benefit the Australian dollar over the Yen. Create your live VT Markets account and start trading now.

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