AUD/JPY hovers around 91.00, eyes on renewed Australia-EU trade negotiations

• AUD/JPY finds support amid renewed optimism over trade negotiations between Australia and the European Union.
• EU Trade Commissioner Maros Sefcovic has suggested establishing a new timeline for talks with Australian Trade Minister Don Farrell.
• Japan's Producer Price Index rose by 0.4% MoM and surged 4.2% YoY in March, exceeding market expectations.

The AUD/JPY pair recovered its daily losses and is trading above the 91.00 mark during Thursday's Asian session. The Australian Dollar (AUD) is finding support amid optimism over renewed trade negotiations between Australia and the European Union (EU).

In a one-hour video call on Wednesday evening, EU officials agreed to revive the stalled trade talks with Australia. EU Trade Commissioner Maros Sefcovic proposed setting a fresh timeline for discussions with Australian Trade Minister Don Farrell. The previous round of negotiations collapsed two years ago over disagreements on agricultural market access for the EU's 450 million consumers.

However, the AUD faced headwinds amid escalating trade tensions between the US and China. US President Donald Trump announced an immediate tariff hike on Chinese imports to 125%, following China's retaliatory increase to 84% on US goods. The renewed trade conflict clouds the outlook for the commodity-linked AUD, given Australia's strong trade ties with China.

The upside in AUD/JPY cross could be limited as the Japanese Yen (JPY) maintains a bullish tone. This is supported by market expectations that the Bank of Japan (BoJ) will continue raising interest rates, following stronger-than-expected Producer Price Index (PPI) data.

Japan's PPI climbed 0.4% in March and surged 4.2% year-over-year, surpassing market expectations. The stronger-than-anticipated data may feed into higher consumer prices, reinforcing the case for further policy tightening by the Bank of Japan (BoJ) and lending support to the Japanese Yen.