AUD/JPY Price Forecast: Strengthens on bullish technical momentum above 100-day EMA

AUD/JPY gathers strength to around 112.20 in Friday’s early European session.
The positive outlook of the cross prevails above the rising 100-day EMA, with bullish RSI momentum.
The first support level is seen at 111.58; the immediate resistance level emerges at 113.65.

Lallalit Srijandorn FXStreet

The AUD/JPY cross attracts some buyers to near 112.20 during the early European session on Friday. The Australian Dollar strengthens against the Japanese Yen (JPY) on a hawkish tone from the Reserve Bank of Australia (RBA). The Australian central bank raised its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10% at its March meeting on Tuesday. This marks the second consecutive rate hike of the year, following a 25 bps increase in February.

RBA Governor Michele Bullock said during the press conference that prices remained too high and the board was worried about second-round effects from higher energy costs, triggered by the Middle East conflict.

On the other hand, escalating tensions in the US-Israeli war with Iran could drive traders back to the JPY as a traditional safe-haven asset. The US-Israeli war with Iran has entered its third week with no sign of ending. Iranian Foreign Minister Abbas Araghchi vowed to show “ZERO restraint” if the country’s energy infrastructure were hit again, per Bloomberg.

Technical Analysis:

In the daily chart, the near-term bias of AUD/JPY is bullish as price extends its advance well above the rising 100-day exponential moving average near 106.60, confirming a firmly established uptrend. The latest candles hold in the upper half of the Bollinger Band envelope, with the middle band around 111.58 acting as a dynamic pivot, reflecting sustained upside pressure rather than extreme overextension. RSI at 57.00 has eased from prior overbought territory above 70, indicating that momentum remains positive but less stretched, which favors trend continuation over an imminent reversal.

Immediate support emerges at the Bollinger middle band at 111.58, with a break below exposing the psychological 111.00 area, while deeper downside would target the lower band support now near 109.52. On the topside, initial resistance aligns with the recent upper Bollinger Band peak around 113.65, followed by the 114.00 region as the next upside objective if bulls regain control. As long as daily closes hold above 111.58, the technical structure favors buying dips within the prevailing uptrend.

(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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