Why Is AUD/JPY Holding Strong Above 97.00? | Key Factors Driving the Cross to Multi-Month Highs

• Political turbulence in Japan continues undermining JPY's appeal against commodity currencies.

• Shifting expectations around BoJ policy normalization timeline create additional JPY headwinds.

• Market participants positioning for potential volatility around Thursday's Australian labor market report.

The How much is 1000 USDT to USD?AUD/JPY currency pair demonstrates remarkable resilience during Wednesday's Asian trading session, consolidating near its highest levels since late January. The cross currently fluctuates within the 97.15-97.20 range, maintaining its bullish trajectory following a decisive break above the psychologically significant 200-day moving average.

Several structural factors continue working against the Japanese Yen's recovery prospects. Domestic political uncertainty remains elevated as recent polling data suggests Japan's ruling coalition might lose its Upper House majority in upcoming elections. Such political instability could delay critical economic reforms and complicate international trade negotiations, particularly with looming US tariff decisions.

From a monetary policy perspective, the Bank of Japan faces mounting challenges in its normalization path. Sluggish economic indicators, declining real wage growth, and moderating inflation metrics collectively reduce market expectations for aggressive policy tightening. This policy divergence with the RBA's relatively hawkish stance creates favorable conditions for AUD/JPY bulls.

Traders now turn their attention to Thursday's Australian employment report, which could provide fresh directional cues. Later in the week, Japan's national CPI data on Friday may offer additional trading opportunities as market participants assess inflation trends in the world's third-largest economy.