AUD/JPY: Capitalizing on the RBA-BoJ Monetary Policy Gap

This analysis outlines a compelling short opportunity in AUD/JPY, driven by a powerful confluence of fundamental and technical factors. The trade is strategically positioned ahead of a key catalyst that could unlock significant downside potential.

1️⃣ The Core Thesis: A Clear Policy Divergence
The primary driver behind this trade is the stark and widening gap in monetary policy between the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ). The RBA is signaling a clear dovish pivot amid a weakening labor market, making an interest rate cut imminent. Conversely, the BoJ is in a tightening phase, creating a fundamental headwind for the AUD relative to the JPY. This divergence underpins the strategic bearish bias.

2️⃣ The Confirmation: Technical Alignment
This fundamental view is supported by a clear technical picture. The pair is in a well-defined downtrend and is currently testing a critical support level. This alignment of fundamental and technical factors presents a clear short opportunity, with the entry positioned for a breakdown below this key juncture.

3️⃣ The Catalyst: The RBA Bulletin
The immediate catalyst for this trade is the upcoming RBA Bulletin on July 24, 2025. Any dovish language from the RBA concerning Australia's economic outlook will likely reinforce expectations for a rate cut and accelerate the downward move in AUD/JPY.

The Trade Setup ✅
Here is the recommended trade setup:

📉 Trade: SHORT AUD/JPY
👉 Entry: 96.56200
⛔️ Stop Loss: 96.96386
🎯 Take Profit: 95.49900
🧠 Risk/Reward Ratio: 2.65

This setup offers a compelling risk-reward profile, capitalizing on a clear and powerful macroeconomic theme. The trade is designed to perform should the expected catalyst confirm the underlying bearish fundamentals.