AUD/JPY Price Forecast: Weakens below 112.00 on intervention fears, bearish bias below 100-day SMA

AUD/JPY softens to near 111.70 in Wednesday’s early European session.
The negative outlook for the cross prevails under the 100-day SMA, with bearish RSI momentum.
The first upside barrier emerges at 112.20; the initial support level is seen at 111.55.

Lallalit Srijandorn FXStreet

The AUD/JPY cross trades in negative territory around 111.70 during the early European trading hours on Wednesday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) as traders are on high alert for currency intervention from Japanese authorities. Japan’s Chief Cabinet Secretary Minoru Kihara said on Tuesday that he will take appropriate action against the foreign exchange moves if needed.

Data released by the Australian Bureau of Statistics (ABS) on Wednesday showed that the country’s Consumer Price Index (CPI) rose by 4.0% YoY in May, compared to a 4.2% increase in April. The market consensus was for 4.4% growth in the reported period. The monthly Consumer Price Index came in at -0.7% in May, versus a 0.4% increase prior, softer than the expectation of a 0.3% decline.

Technical Analysis:

In the daily chart, AUD/JPY keeps a bearish near-term tone as spot remains capped beneath the 100-day simple moving average (SMA) and below the Bollinger middle band. The pair is sliding along the lower side of its recent range, with price holding just above the Bollinger lower band support at 111.54, while the Relative Strength Index (14) at 35.8 points to weak momentum and conditions edging toward oversold.

On the topside, initial resistance is located at the 100-day SMA at 112.20, followed by the Bollinger middle band at 113.23, with the upper band near 114.91 acting as a more distant cap if a stronger rebound unfolds. On the downside, a clear break below the Bollinger lower band at 111.55 would open the door to further losses, reinforcing the prevailing bearish bias as long as daily closes remain beneath the 100-day SMA.

(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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