AUD/JPY Price Forecast: Softens to near 111.00 as bearish bias holds below key technical barriers

AUD/JPY weakens to near 111.15 in Thursday’s early European session.
The cross keeps a bearish near-term tone, with the RSI indicator holding below the midline.
The first upside barrier emerges at 112.80; the initial downside target is seen at 110.15.

Lallalit Srijandorn FXStreet

The AUD/JPY cross trades in negative territory around 111.15 during the early European trading hours on Thursday. A coordinated currency intervention by the United States (US) and Japan provides some support to the Japanese Yen (JPY) against the Australian Dollar (AUD).

Traders remain on high alert for further intervention from Japanese authorities. Japan's Finance Minister Satsuki Katayama said earlier this week that officials will not hesitate to take further action on currency.

Bank of Japan (BoJ) Minutes on Wednesday showed that policymakers debated mounting price risks that likely required more rate hikes even as they raised borrowing costs to a 31-year high in the June policy meeting.

Australia posted a surprise trade surplus in June as commodity exports gained, the Australian Bureau of Statistics revealed on Thursday. Exports rose by 9.6% MoM in June from a fall of 7.6% seen a month earlier (revised from 6.9%). Meanwhile, Imports decreased by 0.2% MoM in June, compared to an increase of 0.9% seen in May (revised from 2.6%).

Fx market braces for further Japan intervention as Dollar strategy evolves

Societe Generale strategists caution that, in the context of recent US-Japan coordination on the Yen, history offers a clear warning: “a single round of intervention is unlikely to be sufficient to turn the trend around, and the FX market is on high alert for the next move.” This underscores their view that the latest action is best seen as one step in a broader, ongoing strategy rather than a definitive turning point for JPY.

Technical Analysis: AUD/JPY maintains a bearish tone on the daily chart

In the daily chart, AUD/JPY keeps a bearish near-term bias as the pair holds beneath the 100-day simple moving average (SMA) and the Bollinger middle band. The Relative Strength Index (14) at 38.81 remains below the neutral 50 line, suggesting subdued but not oversold momentum after the recent slide.

On the topside, initial resistance emerges at the 100-day SMA around 112.80, followed closely by the Bollinger middle band at 112.90, forming a tight cap that would need to be reclaimed to ease downside pressure. Any follow-throght above this level could pave the way to the July 27 high of 114.67, en route to the upper Bollinger band higher up near 115.65 as a more distant barrier.

On the downside, the lower Bollinger band at 110.15 offers the next notable support. A decisive break beneath this floor could expose the 100.00 psychological level, followed by the August 3 low of 109.24.

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

Japanese Yen FAQs

What key factors drive the Japanese Yen?

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.

How do the decisions of the Bank of Japan impact the Japanese Yen?

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.

How does the differential between Japanese and US bond yields impact the Japanese 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.

How does broader risk sentiment impact the Japanese Yen?

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

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.

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