AUD/JPY Price Forecast: Drifts higher above 114.00, bullish bias prevails

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The AUD/JPY cross gains ground to near 114.25 during the early European session on Thursday. The Australian Dollar (AUD) strengthens against the Japanese Yen (JPY) as Australia’s Consumer Price Index (CPI) inflation surged in March, as war in the Middle East drove up energy costs.

AUD/JPY edges higher to around 114.25 in Thursday’s early European session.
The constructive outlook of the cross remains intact above the 100-day EMA, with bullish RSI momentum.
The first upside barrier emerges at 114.72; the initial support level is seen at 113.20.

Data released by the Australian Bureau of Statistics (ABS) revealed on Wednesday that CPI climbed by 4.6% year-over-year (YoY) in March, versus a 3.7% increase prior. While the figure was slightly below the 4.7% forecast, it remains well above the Reserve Bank of Australia’s (RBA) target range, keeping pressure on the central bank to hike rates.

On the other hand, Japanese authorities are on high alert for currency intervention, which might help limit the JPY’s losses. Japanese Finance Minister Satsuki Katayama said that authorities are on standby to take decisive action against speculative currency moves.

Technical Analysis:

In the daily chart, AUD/JPY sustains a bullish near-term bias as it holds above the 20-day Bollinger simple moving average and the 100-day exponential moving average, keeping price well anchored within an established uptrend channel. The 14-day Relative Strength Index at 64.32 sits in positive territory without yet signalling extreme overbought conditions, which suggests upside momentum remains constructive while leaving room for additional gains.

On the topside, immediate resistance emerges at the April 28 high of 114.72. The next hurdle is located at the upper Bollinger band near 115.85, where recent volatility boundaries could cap further advances and invite consolidation. On the downside, initial support is seen at the mid-Bollinger band around 113.20, ahead of the lower band near 110.60 and the 100-day EMA at 109.25, levels that collectively form a broader demand zone that would need to give way to signal a deeper corrective phase.

(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.