AUD/JPY Price Forecast: Gains traction above 113.00, bullish trend stays firm above 100-day SMA

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The AUD/JPY cross trades in positive territory around 113.25 during the early European trading hours on Wednesday. The Japanese Yen (JPY) edges lower against the Australian Dollar (AUD) after reports regarding the Government Pension Investment Fund (GPIF).

AUD/JPY gains ground to near 113.25 in Wednesday’s early European session.
The cross keeps a bullish vibe above the 100-day SMA, with RSI holding above the midline.
The first upside barrier emerges at 113.55; the initial support level is seen at 112.65.

Finance Minister Satsuki Katayama said on Tuesday that the government is considering nudging the world's largest pension fund to buy domestic financial assets to support the currency, though concrete plans have yet to materialize. However, traders remain on alert for possible intervention from Japanese authorities, which might cap the upside for the cross.

Technical Analysis:

In the daily chart, AUD/JPY holds a near-term bullish bias as price extends above the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, keeping the broader uptrend supported. The Relative Strength Index (RSI) at 56.23 sits in positive territory without entering overbought conditions, suggesting that buying pressure remains constructive but not overstretched.

On the topside, the next notable resistance is the upper Bollinger band, emerging around 113.55, where the current advance could start to face profit-taking. The next hurdle to watch is the May 14 high of 114.66. On the downside, initial support is seen at the 100-day SMA at 112.65, followed by the Bollinger midline near 112.35, while deeper pullbacks would likely be cushioned by the lower Bollinger band around 111.15.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

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.

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