AUD/JPY Price Forecast: Constructive outlook remains intact above 109.00

AUD/JPY softens to near 109.15 in Wednesday’s early European session.
The cross keeps the positive bias above the 100-day EMA, with bullish RSI momentum.
The first downside target is located at 108.00; the immediate resistance level is seen at 110.80.

Lallalit Srijandorn FXStreet

The AUD/JPY cross loses ground around 109.15 during the early European session on Wednesday. Foreign inflows into Japanese equities following Prime Minister Sanae Takaichi's landslide election victory increase demand for the Japanese Yen (JPY) against the Australian Dollar (AUD).

On the other hand, hawkish remarks from the Reserve Bank of Australia (RBA) policymaker might lift the Aussie. RBA Deputy Governor Andrew Hauser said on Wednesday that inflation was too high and policymakers were committed to doing whatever was necessary to bring it to heel. Markets currently priced in nearly a 70% probability that the interest rates will rise to 4.10% at the RBA's May meeting, following the release of first-quarter (Q1) inflation report.

Technical Analysis:

In the daily chart, AUD/JPY holds well above the 100-day EMA, maintaining the medium-term bullish bias. The average slopes higher, underscoring persistent trend strength. RSI at 60.70 remains in positive territory, indicating supportive momentum without overbought conditions. A daily close above the upper band at 110.80 would extend the advance. On dips, the 20-day SMA at 108.00 offers initial support, while the 100-day EMA at 103.57 underpins the structure.

Bollinger Bands show price pressing near the upper band as the envelope widens, reflecting strengthening bullish pressure and rising volatility. The broader bias stays higher while volatility expansion favors trend continuation, with setbacks expected to be shallow above the aforementioned supports.

(The technical analysis of this story was written with the help of an AI tool.)

Australian Dollar FAQs

What key factors drive the Australian Dollar?

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

How does the health of the Chinese Economy impact the Australian Dollar?

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

How does the price of Iron Ore impact the Australian Dollar?

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

How does the Trade Balance impact the Australian Dollar?

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD holds losses below 1.3550 after weak UK jobs data

GBP/USD holds losses below 1.3550 in European trading hours on Tuesday. The UK ILO Unemployment Rate held steady at 4.9% in the three months to June, against a forecast of 4.8%, while Employment Change arrived at 83K in the same period versus 147K previous. Weak UK labor data keep the British Pound under pressure, driving the pair lower.

EUR/USD stays below 1.1600 despite upbeat sentiment data

EUR/USD struggles to gain traction and trades below 1.1600 in the European session on Tuesday, even after the data from the Eurozone and Germany highlighted improving economic sentiment in August. The US Dollar (USD) benefits from the risk-averse market atmosphere as tensions in Middle East remain high, making it difficult for the pair to turn north.

Gold sticks to losses below $4,400 as USD recovers further from two-month low

Gold remains depressed below the $4,400 mark through the first half of the European session, snapping a two-day winning streak amid a broadly firmer US Dollar. Inflation risks stemming from higher oil prices back the case for at least one interest rate hike by the US Federal Reserve in 2026.

Pi Network holds steady amid app studio costs surge to push user adoption

Pi Network extends a consolidation range capped below $0.0900 holding above the $0.0839 support level. PI token remains under pressure as the Core Team pushes for real user adoption by raising costs for AI-powered app creation, effective from August 24. Leverage-linked risk exposure eases as Open Interest declines despite an increase in social interest.

Fiscal concerns and doubts on Fed independence send US yields to long-term highs

US Treasury yields keep rising across the curve this week, with the yield for the 30-year Treasury bond reaching its highest level since 2007, during the global financial crisis, at 5.33% so far on Monday. A mix of concerns about the ballooning US fiscal deficit and growing doubts about the Federal Reserve’s Independence are increasing pressure on US Government Bonds.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.