AUD/JPY Price Forecast: Holds gains near 111.00, but maintains bearish tone below 100-day SMA
- AUD/JPY holds positive ground near 110.90 in Monday’s early Asian session.
- The cross keeps the bearish vibe, with the price holding below the 100-day SMA.
- The first upside barrier emerges at 111.45; the initial support level to watch is 110.50.
The AUD/JPY cross trades in positive territory around 110.90 during the early European trading hours on Monday. Growing expectations for an imminent interest rate hike from the RBA provide some support to the Australian Dollar (AUD) against the Japanese Yen (JPY). Traders await the Reserve Bank of Australia (RBA) policy meeting later on Tuesday.
The RBA is expected to raise the Official Cash Rate (OCR) for a fifth time this year. Almost all economists surveyed by Bloomberg reckon the nine-member board will make a 25 basis points (bps) hike tomorrow, bringing the OCR to 4.85%, the highest level in 18 years.
Traders remain on high alert for currency intervention from Japanese authorities. This, in turn, might lift the JPY and cap the upside for the cross. Japan’s Finance Minister Satsuki Katayama said on Monday that the joint FX statement with the US persists and the government will act against disorderly moves. Katayama added that it’s crucial to maintain stable foreign exchange markets and the government needs to avoid chaotic fluctuations.
RBA seen hiking then holding as TD Securities flags upside inflation risks
According to TD Securities, “the risks to inflation are tilted to the upside in Q4,” a backdrop they believe is “likely to encourage markets to price in some chance of a follow-up hike in Q1 of 2027.” After next week’s anticipated move, the bank expects the RBA to pause, noting that “after next week's anticipated hike, we forecast the Bank moving to the sidelines to assess the impact of the series of rate hikes to date.” TD Securities argues that “the lags in policy and signs of slowing economic activity should keep the Bank on hold in 2027 with cuts to commence in 2028.” Strategists add that “the Monetary policy bias table below is not too different from what we presented ahead of the September RBA meeting,” and that “this time we expect” the RBA’s hawkish rhetoric to be reinforced by persistent upside inflation risks even as the policy stance shifts to a prolonged hold.
Technical Analysis: AUD/JPY retains a negative outlook below the 100-day SMA
In the daily chart, AUD/JPY holds below the 100-day simple moving average (SMA), which maintains a capped, mildly bearish tone despite the recent bounce. Price is consolidating between the Bollinger Bands, trading above the middle band but still facing overhead supply near the upper band; the Relative Strength Index (RSI) around 52 suggests neutral-to-slightly improving momentum that has yet to overcome the prevailing structural resistance.
On the topside, initial resistance level is aligned at the uppber boundary of Bollinger band near 111.45, en route to the 100-day SMA at 111.95. A daily close above this level would be needed to shift the short-term bias back toward the upside, with the next hurdle emerging at the August 18 high of 113.61.
On the downside, immediate support level is located at the Bollinger middle band around 110.50, followed by the 110.00 psychological level. The next contention level is seen at the lower limit of Bollinger band at 109.50. A drop through this lower boundary would reopen the path toward a more pronounced bearish continuation.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
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.
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.
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.
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.