AUD/JPY sticks to gains above 97.00, close to multi-month high set on Tuesday

• AUD/JPY sticks to its bullish bias as domestic political uncertainty undermines the JPY.
• Reduced BoJ rate cut bets further weigh on the JPY and also lend support to the cross.
• Traders now look forward to the Australian jobs report on Thursday for a fresh impetus.

The AUD/JPY cross attracts fresh buyers during the Asian session on Wednesday and steadily climbs back closer to its highest level since late January touched the previous day. Spot prices currently trade around the 97.15-97.20 region and seem poised to build on the recent breakout momentum through a technically significant 200-day Simple Moving Average (SMA).

The Japanese Yen (JPY) continues with its relative underperformance in the wake of domestic political uncertainty and turns out to be a key factor acting as a tailwind for the AUD/JPY cross. In fact, recent polls indicate that Japan's ruling coalition - the Liberal Democratic Party (LDP) and Komeito - might lose its majority in the Upper House election scheduled for July 20. This could heighten both fiscal and political risks in Japan and complicate trade negotiations amid the looming US tariffs on Japanese exports.

Adding to this, slowing economic growth in Japan, declining real wages, and signs of cooling inflationary pressures could further complicate the Bank of Japan's (BoJ) monetary policy normalization schedule. This keeps the JPY depressed and validates the near-term positive outlook for the AUD/JPY cross. Moreover, the Reserve Bank of Australia's (RBA) surprise decision to keep interest rates on hold earlier this month should benefit the Australian Dollar (AUD) and backs the case for a further near-term appreciation.

The market focus now shifts to the Australian monthly employment details, due for release during the Asian session on Thursday. Apart from this, Japan's National Consumer Price Index (CPI) report on Friday should contribute to providing some meaningful impetus to the AUD/JPY cross during the latter part of the week.