RBA raises rate to 4.85% in fifth hike this year as Australian Dollar eases against Japanese Yen

• Tuesday’s Asian trading sees AUD/JPY ease towards 110.20.
• A 25 bps increase takes the RBA interest rate to 4.85% at Tuesday’s November policy meeting.
• The risk of currency intervention by Japanese authorities keeps traders on heightened alert.

Following the Reserve Bank of Australia (RBA) interest rate decision, the Australian Dollar (AUD) faces some selling against the Japanese Yen (JPY). AUD/JPY slips to around 110.20 in Tuesday’s Asian session.

A widely anticipated 25 basis point (bps) increase in the Official Cash Rate (OCR), from 4.60% to 4.85%, followed the conclusion of the RBA’s November monetary policy meeting. The move marks its fifth rate rise of 2026, taking the rate to its highest level in 18 years.

The Monetary Policy Board split six to three in favour of an increase, with the minority preferring to leave the OCR at 4.60%. In its statement, the board described inflation as still elevated and broad-based, warning of a growing risk that higher inflation expectations could become entrenched.

At 04:30 GMT, traders will look to RBA Governor Michele Bullock’s press conference for further direction. Should Bullock strike a hawkish tone, the Australian Dollar could gain against the JPY in the near term.

However, warnings of intervention by Japanese authorities could limit gains in the cross. Speaking on Monday, Japan’s Finance Minister Satsuki Katayama stressed the importance of stable foreign exchange markets and the government’s need to prevent disorderly fluctuations.

Katayama had also said last week that the government was prepared to act decisively in the currency market. Those remarks signalled that Tokyo remains vigilant over persistent JPY weakness.

At last week’s policy meeting, the Bank of Japan (BoJ) held its short-term interest rate at 1.25%, a decision in line with market expectations.

Inflation surprise strengthens Aussie yield appeal as another RBA rise is expected

Brown Brothers Harriman strategists expect Tuesday’s upcoming "RBA policy decision and Statement on Monetary Policy" to bring a "second straight 25bps hike to 4.85% because inflation is materially worse than the bank assessed in August." Pointing out that "cash rate futures imply 83% probability of a hike," they also argue that "hawkish guidance would widen AUD’s yield advantage," lending further support to the Australian Dollar as the RBA’s policy stance diverges from those of its peers.

Technical Analysis: AUD/JPY Remains Bearish Beneath the 100-day SMA

Trading below both the Bollinger middle band and the 100-day simple moving average (SMA), AUD/JPY maintains a bearish short-term bias on the daily chart. The Bollinger upper band also limits the pair, adding to the negative tone. Meanwhile, a Relative Strength Index (14) reading of around 45 points to muted momentum rather than oversold conditions, suggesting scope for additional losses.

Any rebound would first encounter resistance at the Bollinger middle band of 110.45, ahead of the upper band near 111.40. Further up, the 100-day SMA at 111.90 presents another obstacle to recovery. Below current levels, the Bollinger lower band around 109.50 provides the next notable support, where selling could pause. A sustained breach of that floor, however, would likely pave the way for further declines on the daily chart.

(The technical analysis of this story was written with the help of an AI tool. Know more.)