AUD Holds Losses After Cautious RBA; Struggles Near Two-Week Low vs JPY

Lead: The AUD/JPY cross extended weakness during early European trading on Tuesday, trading around 110.04, down approximately 0.45% on the day, as the RBA's latest monetary policy update failed to boost AUD sentiment.

**RBA Decision Triggers AUD Selling**

The Australian dollar remained broadly subdued following the RBA's latest rate decision. AUD/USD gave back some of the previous day's gains during the Asian session, trading near 0.7050, reflecting cautious market sentiment toward the RBA's policy stance. This sentiment spilled over to the AUD/JPY cross, which quickly met fresh selling pressure after a brief rise to the 110.70 region, falling to a two-week-plus low.

**JPY Short Covering Adds Pressure to the Cross**

Ongoing speculation over potential intervention by Japanese authorities triggered some JPY short covering, adding extra pressure on AUD/JPY. According to market reports, the cross has remained weak for a second consecutive session, although downside momentum has eased. Periodic return of JPY buying, coupled with a lack of fundamental support for the AUD itself, left the pair struggling around the 110.00 psychological level.

**Near-Term Focus Shifts to External Risk Sentiment**

The AUD/JPY's current movement is also constrained by a range of negative factors, including fluctuations in global risk appetite and broad pressure on commodity-linked currencies. The spot price sits near monthly lows, and if it fails to reclaim the 110.00 level effectively, technicals could open further downside space. Market participants are closely watching Japanese authorities' next moves and broader shifts in market risk sentiment to gauge whether the cross can find support at current levels.