AUD/JPY Price Forecast: Strengthens above 111.50, supported by bullish technicals and China data

AUD/JPY edges higher to near 111.70 in Monday’s early European session.
The positive tone of the cross remains intact above the rising 100-day EMA, with bullish RSI momentum.
The initial support level is seen at 111.00; the immediate resistance level to watch is 112.50.

Lallalit Srijandorn FXStreet

The AUD/JPY cross trades in positive territory around 111.70 during the early European session on Monday. Traders will closely monitor the developments surrounding the United States (US)-Israel war with Iran, a scenario that typically boosts the demand for safe-haven assets.

US President Donald Trump said on Monday that he is talking with other countries about policing the Strait of Hormuz, adding that Israel is collaborating with the US on securing the vital shipping route. Over the weekend, US forces targeted every military site on Kharg Island, a critical Iranian oil export hub. Iran has threatened to retaliate against any US-linked oil facilities in the region. Signs of rising tensions and a prolonged war in the Middle East could lift the JPY and create a headwind for the cross.

On the other hand, the stronger-than-expected Chinese economic data could support the China-proxy Aussie, as China is a major trading partner for Australia. China’s Retail Sales rose 2.8% YoY in January-February, compared to 0.9% in the previous reading, the National Bureau of Statistics (NBS) reported on Monday. This figure came in above the consensus of 2.5%. Chinese Industrial Production climbed 6.3% YoY in January-February, versus 5.2% prior, exceeded market expectations of 5.1%.

Technical Analysis:

In the daily chart, the near-term bias of AUD/JPY is bullish as price holds near recent highs and remains well above the rising 100-day EMA around 106.20, confirming a medium-term uptrend. The latest candles trade close to the upper Bollinger Band near 113.50, showing strong upward pressure but also signalling stretched conditions after the latest acceleration from the mid‑107s. RSI near 58 keeps momentum in positive territory without showing overbought stress, suggesting dips attract buyers while upside progress may moderate after the recent breakout phase.

Initial support emerges at 111.00, where minor price congestion aligns with the Bollinger mid-line region just below 110.95, and a break below would expose the 110.00 psychological area followed by stronger support at 108.50. On the topside, immediate resistance stands at 112.50 ahead of the recent band high around 113.50, where the upper Bollinger Band caps the advance.

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

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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