- AUD/JPY oscillates in a range below a fresh monthly top touched earlier this Tuesday.
- The mixed technical setup warrants some caution before positioning for further gains.
- A sustained strength beyond the 100 confluence will be seen as a fresh trigger for bulls.
The AUD/JPY cross seesaws between tepid gains/minor losses through the first half of the European session and now seems to have stabilized around mid-98.00s, just below the monthly peak touched earlier this Tuesday.
The Japanese Yen (JPY) continues with its volatile two-way price moves amid domestic political uncertainty, which could hinder the Bank of Japan's (BoJ) plan to steadily lift interest rates from near zero. This, in turn, fails to assist the AUD/JPY cross to build on the overnight modest gains and leads to subdued range-bound price action. That said, the prevalent risk-on mood continues to undermine the safe-haven JPY, which, along with the Reserve Bank of Australia's (RBA) hawkish stance, acts as a tailwind for the currency pair.
From a technical perspective, the AUD/JPY cross is holding comfortably above the 38.2% Fibonacci retracement level of the July-August downfall. This, in turn, supports prospects for an extension of the recent strong recovery from the vicinity of the 90.00 psychological mark, or the lowest level since May 2023 touched earlier this month. That said, mixed oscillators on the daily chart warrant some caution for bullish traders. Hence, any subsequent move up is more likely to remain capped near the 100.00 confluence resistance.
The said handle comprises the very important 200-day Simple Moving Average (SMA) and the 50% Fibo. level, which if cleared decisively will be seen as a fresh trigger for bullish traders. The AUD/JPY cross might then accelerate the positive move towards the 101.00 mark before aiming to test the 102.00-102.10 supply zone or the 61.8% Fibo. level.
On the flip side, the 97.45 area (38.2% Fibo. level) now seems to have emerged as immediate strong support. This is followed by the 97.00 round figure and support near the 96.30-96.25 region. Some follow-through selling below the 96.00 mark might expose the 23.6% Fibo. level, around the 94.65 region, with some intermediate support near the 95.55 horizontal zone and the 95.00 psychological mark.
AUD/JPY daily chart
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds.
The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen.
A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD edges higher to 0.6000; bulls lack conviction amid US-China trade war concerns
AUD/USD holds above its lowest level since March 2020 touched the previous day and trades with a positive bias around the 0.6000 mark during the Asian session on Tuesday. A stable performance around the equity markets, following the previous day's tariffs-inspired volatile swings, support the risk-sensitive Aussie amid subdued USD price action.
USD/JPY stalls its recovery from multi-month low; remains below 148.00
USD/JPY oscillates around the 148.00 mark during the Asian session on Tuesday amid mixed cues. A modest recovery in the global risk sentiment, along with receding bets that the BoJ would raise the policy rate at a faster pace, undermines the safe-haven JPY.
Gold price moves away from multi-week low; looks to reclaim $3,000
Gold price edges higher during the Asian session on Tuesday and now seems to have snapped a three-day losing streak to a nearly four-week low touched the previous day. Concerns that a trade war will hit the US economy and trigger a recession, along with mounting bets for more aggressive rate cuts by the Fed, cap the USD recovery.
Trump tariffs shake crypto markets, where are Bitcoin and meme coins headed?
Bitcoin and altcoin prices were on a rollercoaster ride on Monday as traders digested the developments surrounding tariffs. From speculation of a 90-day pause on tariffs to Bitcoin’s price swinging from a $74,500 low to $81,200 high within a single day, the crypto market meltdown has been an event for traders.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.