AUD/JPY Price Forecast: Softens below 114.00, but uptrend holds above 100-day EMA

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The AUD/JPY cross attracts some sellers to around 113.95 during the early European session on Thursday. Uncertainty regarding Iran's participation in further peace talks could provide some support to a safe-haven currency such as the Japanese Yen (JPY) against the Australian Dollar (AUD).

AUD/JPY weakens to near 113.95 in Thursday’s early European session.
The positive outlook of the cross remains intact above the 100-day EMA, with bullish RSI momentum.
The first upside barrier emerges at 115.60; the initial support level is seen at 113.09.

Furthermore, intervention fears might cap the upside for the cross. Japanese authorities, including Finance Minister Satsuki Katayama, highlighted a "high sense of urgency" regarding speculative and weak-JPY moves driven by Middle East tensions.

Technical Analysis:

In the daily chart, AUD/JPY holds well above the Bollinger middle band and the 100-period exponential moving average (EMA), keeping the near-term bias clearly bullish despite the recent pause. Price is stretching toward the upper Bollinger band resistance at 115.58, while the Relative Strength Index (RSI) at 65.9 leans into overbought territory, hinting that upside momentum is strong but vulnerable to bouts of consolidation.

On the topside, a decisive break above the upper Bollinger band at 115.60 would open the door to further gains and extend the prevailing uptrend. On the downside, initial support emerges the April 20 low of 113.09. The next contention level is located at the Bollinger middle band around 112.12, with deeper protection from the 100-period EMA at 108.73 and the lower Bollinger band at 108.65, where buyers would be expected to reappear on any sharper corrective pullback.

(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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