AUD/JPY Price Forecast: Positive bias prevails, eyes resistance above 113.50

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The AUD/JPY cross posts modest gains around 113.00 during the early European session on Wednesday. The Australian Dollar (AUD) strengthens against the Japanese Yen (JPY) after the Reserve Bank of Australia (RBA) delivers a rate hike and keeps a hawkish tone.

AUD/JPY trades in positive territory near 113.00 in Wednesday’s early European session.
The constructive outlook of the cross remains intact above the 100-day EMA, with bullish RSI momentum.
The immediate resistance level emerges at 113.70; the initial support level is seen at 111.40.

The RBA raised the Official Cash Rate (OCR) by 25 basis points (bps) to 4.10% at its March policy meeting on Tuesday. This follows a similar hike in February, marking the first back-to-back increases since mid-2023. During the press conference, Governor Michele Bullock stated that prices remained too high and the board was worried about second-round effects from higher energy costs, triggered by the Middle East conflict.

The attention will shift to Australia’s employment data for February, which is due later on Thursday. The Unemployment Rate is expected to remain unchanged at 4.1% in February. Any signs of weakening in the US labor market could undermine the Aussie in the near term.

Traders will closely monitor the situation in the Middle East. Iranian security chief Ali Larijani killed in Israeli air strikes, per BBC. Meanwhile, Iranian army chief Amir Hatami vowed to launch a “decisive and regrettable” retaliation for the killing of security chief Ali Larijani in an Israeli airstrike. Fears of a prolonged war in the Middle East could boost safe-haven demand, which supports the JPY and acts as a headwind for the cross.

Technical Analysis:

In the daily chart, the near-term bias of AUD/JPY is bullish as price remains well above the 100-day exponential moving average around 106.40, keeping the broader uptrend intact. The latest candles track above the rising Bollinger middle band while the upper band continues to expand, confirming strong upside volatility. Daily RSI hovers in the low 60s, staying in positive territory without entering overbought extremes, which supports sustained buying pressure rather than an exhausted spike.

Immediate resistance emerges at the recent peak near 113.70, backed by the upper Bollinger Band at 113.80; a daily close above this area would open the way toward the 115.00 region next. On the downside, initial support is at 111.40 from the Bollinger middle band, followed by the 110.15–110.35 zone, which coincides with prior consolidation and the mid-October band cluster. A deeper pullback would target the 108.70 area, just above the 100-day EMA, where trend support aligns with the lower part of the recent Bollinger structure; only a break below that region would threaten the current bullish setup.

(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.

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