AUD/JPY Price Forecast: Tumbles below 113.00 on suspected Yen intervention, uptrend still intact

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The AUD/JPY cross tumbles to near 112.75 during the early European session on Wednesday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) on suspected interventions from Japanese authorities.

AUD/JPY slumps to around 112.75 in Wednesday’s early European session.
The cross keeps bullish vibe, but further consolidation cannot be ruled out in near term.
The first upside barrier to watch is 113.60; the initial support level is seen at 112.25.

Traders remain on edge over the potential for Japanese authorities to step back into the market after last week’s intervention to curb weakness. Japanese Finance Minister Satsuki Katayama said Japan can take action against speculative foreign-exchange movements.

The Reserve Bank of Australia (RBA) raised its Official Cash Rate (OCR) to 4.35% from 4.10% after concluding its May monetary policy meeting. RBA Governor Michele Bullock said the current monetary policy is "a bit restrictive," providing the board space to monitor how the Middle East conflict and domestic data evolve.

Technical Analysis:

In the daily chart, AUD/JPY holds above the 100-day exponential moving average (EMA), keeping the broader uptrend intact, while price also remains over the lower Bollinger Band, hinting at nearby downside protection. However, the Relative Strength Index (RSI) has eased back toward the 50 area, suggesting momentum has cooled and leaving the pair vulnerable to consolidation even within a generally constructive bias.

On the topside, immediate resistance is aligned with the Bollinger middle band, the 20-day simple moving average, at 113.60, followed by the upper Bollinger Band near 114.85. On the downside, initial support is seen at the lower Bollinger Band at 112.25, with a deeper floor at the 100-day EMA around 109.52, where buyers would be expected to re-emerge if a broader corrective pullback develops.

(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.