AUD/JPY Price Forecast: Eases to near 114.00, but maintains bullish structure above 100-day SMA

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AUD/JPY weakens to near 114.00 in Friday’s early European session.
The constructive outlook of the cross prevails above the 100-day SMA, with bullish RSI momentum.
The immediate resistance emerges at 114.80; the initial support is seen at 114.00.

The AUD/JPY cross loses traction to around 114.00 during the early European session on Friday. Fears of currency intervention from Japanese authorities provide some support to the Japanese Yen (JPY) against the Australian Dollar (AUD). Japan’s Finance Minister Satsuki Katayama said on Friday that the authorities are always ready to react suitably as needed on foreign exchange.

On the other hand, a hawkish tone from the Reserve Bank of Australia (RBA) might help limit the Aussie’s losses. RBA Governor Michele Bullock on Thursday emphasized that the central bank remains strictly focused on curbing inflation, following three interest rate hikes earlier this year that pushed the cash rate to 4.35%. Bullock further stated that inflation is too high, and the board will do what it considers necessary to achieve our mandate to deliver price stability and full employment.

Technical Analysis:

In the daily chart, AUD/JPY retains a bullish near-term bias as it holds well above the 100-day simple moving average (SMA), keeping the broader uptrend intact despite the latest consolidation. Price is now pressing into the Bollinger band midline resistance at, with the upper band higher limiting topside extension for now. The Relative Strength Index (14) around 52 is broadly neutral, hinting that momentum has cooled but not reversed, allowing for further gains if resistance levels give way.

On the topside, immediate resistance is located at the upper Bollinger band resistance at 114.80 and a daily close above this barrier would open the door toward the 115.00 psychological level. On the downside, initial intraday support is seen around the current price area near 114.00, ahead of a stronger Bollinger band floor at 113.20; a deeper pullback would expose the 100-day SMA at 111.55, where buyers are likely to defend the broader bullish structure.

(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.