Diverging expectations regarding the policies of the Reserve Bank of Australia (RBA) and the Bank of Japan are holding back further growth in spot prices.

Today, the AUD/JPY pair is recovering after a decline in the Asian session and has even surpassed its weekly high. The Japanese yen continues to attract sellers after the Bank of Japan's Summary of Opinions from its July meeting highlighted policymakers' ongoing concerns about the negative impact of U.S. tariff increases on the domestic economy. At the same time, positive market sentiment is weighing on the yen as a safe-haven currency relative to the more risk-sensitive Australian dollar, providing additional support for the AUD/JPY pair.

However, Australian dollar buyers are not yet inclined to make active purchases and prefer to remain cautious ahead of a key event — the Reserve Bank of Australia's policy decision scheduled for next week. On Tuesday, the RBA is expected to announce an interest rate cut. This could act as a limiting factor for significant growth in the AUD/JPY pair, especially compared with the Bank of Japan's more hawkish policy expectations.

It is worth noting that at its July meeting, the Bank of Japan revised its inflation forecast and confirmed its readiness to raise interest rates if inflation data meets projections. This stance keeps the door open for rate hikes before the end of the year, which should help limit further yen weakness and gives AUD/JPY buyers reason to remain cautious in the near term.

From a technical perspective, the recent breakout above the 200-day SMA served as a bullish signal for traders and now represents the pair's key support. Furthermore, daily chart oscillators have only recently begun to gain positive momentum, supporting further upside. Resistance is expected at the 100-period SMA on the 4-hour chart, around 96.91. A breakout above this level would open the way toward the psychological level of 97.00, with some resistance near 96.80. Oscillators on the same 4-hour chart have also started to turn positive, reinforcing the bullish outlook.