The Australian Dollar/Japanese Yen (AUD/JPY) pair is under pressure, dropping to about 100.40. This decline follows the Reserve Bank of Australia (RBA) keeping its Official Cash Rate (OCR) steady at 3.6% due to ongoing concerns about inflation. The RBA has held this rate for two meetings in a row as inflation rises. The Consumer Price Index (CPI) went up by 1.3% in the third quarter, exceeding expectations and previous figures. The Producer Price Index (PPI) also increased, showing that inflation continues to be a concern in the economy.

Japan’s Ministry of Finance and Currency Intervention

Many investors think Japan’s Ministry of Finance may step in to strengthen the Japanese Yen in the forex market. Recent movements have led the Japanese Finance Minister to express urgency in monitoring the situation. The Yen remains weak, partly due to uncertainty about future interest rate hikes from the new Prime Minister. The heat map indicates that the Japanese Yen is currently the strongest against the Australian Dollar. On the currency exchange, the JPY rose by 0.33% against the AUD, highlighting the Yen’s strength compared to other major currencies. Factors like quantitative easing and tightening also play a role in the currency’s value. Economic indicators and inflation are crucial for predicting the movements of both currencies, with the RBA using different tools to ensure economic stability and adjust currency value.

RBA’s Cautious Stance Amidst Inflation

We are seeing selling pressure on the AUD/JPY pair after the RBA decided to keep its interest rate at 3.6% today, November 4th, 2025. This was expected, as the RBA is worried about persistent inflation in the economy. Consequently, the pair has fallen close to the 100.40 level. The RBA’s cautious approach is backed by the latest inflation data. Australia’s month-end CPI for October 2025 showed a 3.4% increase from the previous year, remaining above the RBA’s target range of 2-3%. With inflation hard to control, any rate cuts seem unlikely, and this pause is reducing the upward momentum of the Australian Dollar. On the other hand, the Japanese Yen is gaining strength as the possibility of government intervention in currency markets grows. The USD/JPY is hovering near the 155 level, a crucial point that has previously led to action by Japanese officials. We recall the significant interventions in late 2022, when the Ministry of Finance spent over ¥9 trillion to support the Yen, making current warnings about intervention more serious. For those trading derivatives, this situation suggests preparing for a potential drop in AUD/JPY in the coming weeks. Buying put options on the pair could be a straightforward strategy to profit from a decline while clearly managing risk. Increased discussions about intervention may also raise implied volatility, making the pricing of these options an important factor to monitor. Create your live VT Markets account and start trading now. Create your live VT Markets account and start trading now.

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