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AUD/JPY Price Forecast: Holds gains above 110.50, but maintains bearish bias below 100-day SMA

  • AUD/JPY gathers strength to near 110.70 in Wednesday’s early European session. 
  • The cross keeps a negative outlook, with bearish RSI momentum. 
  • The first upside barrier emerges at 112.45; the key contention level is located at the 100.00 psychological figure. 

The AUD/JPY cross trades in positive territory around 110.70 during the early European trading hours on Wednesday. The Japanese Yen (JPY) weakens against the Australian Dollar (AUD) as rising energy prices due to the ongoing conflict in the Middle East raise import expenses for Japan’s oil-dependent economy.

Analysts expect the Bank of Japan (BoJ) to announce a 25-basis-point interest rate hike at its upcoming policy meeting on Friday. This would bring the highest borrowing costs for Japan since April 1995.

"We expect the BoJ to hike 25 bps at the upcoming meeting on 16-17 September," said OCBC Group Research analysts. "We have pencilled in 2 additional hikes of 25bps in 2027, and we expect these hikes to be front loaded should the BoJ continue its hawkish rhetoric after the September hike is delivered," they added. 

Traders will closely monitor the BoJ Governor Kazuo Ueda’s speech about the pace of future rate hikes and how far the central bank could take rates under the current tightening cycle. Hawkish comments from Ueda could boost the JPY and act as a headwind for the cross in the near term. 

BoJ seen delivering pre-emptive hike as Japan data and inflation risks firm

Analysts at Standard Chartered expect the BoJ to raise the policy rate by "25bps to 1.25% at its 17-18 September meeting," while stressing that the central bank is likely to "avoid an overly hawkish message." They argue the economy appears able to absorb another modest hike, noting that "Q2 GDP growth was revised up, exports remain robust, investment indicators are resilient, and real wages are rising." At the same time, they highlight that "inflation risks are also increasing as higher energy prices and earlier JPY weakness pass through the supply chain," reinforcing the case for a pre-emptive move even as policymakers remain cautious about the broader pace of normalisation.

Chart Analysis AUD/JPY

Technical Analysis: AUD/JPY keeps a bearish vibe below the 100-day SMA

In the daily chart, AUD/JPY maintains a bearish near-term bias as it holds below the 100-day Simple Moving Average (SMA) and the Bollinger middle band. The pair is drifting within the lower half of the Bollinger envelope, and the Relative Strength Index (RSI) at 36.04 stays close to oversold territory, which suggests persistent downside pressure, even if a short-term bounce cannot be ruled out.

On the topside, initial resistance emerges at the August 10 low of 112.45, en route to the Bollinger middle band near 112.60. Any follow-through buying above this level could pave the way to the 100-day SMA at 112.95, with the upper Bollinger band around 115.90 acting as a more distant cap if a stronger recovery unfolds.

On the downside, the next notable support level is seen at the 100.00 psychological level. Further south, the next contention level to watch is the lower Bollinger band at approximately 109.25, followed by the March 31 low of 108.79, and the February 16 low of 107.73.

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

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Author

Lallalit Srijandorn

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.

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