AUD/JPY Price Forecast: Softens to near 111.00 but holds bullish momentum above 100-day EMA

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The AUD/JPY cross trades in negative territory around 111.15 during the early European session on Thursday. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) following hawkish remarks from the Bank of Japan (BoJ) policymakers.

AUD/JPY weakens to near 111.15 in Thursday’s early European session.
The path of least resistance is to the upside, with the price holding above the 100-day EMA.
The first downside target emerges at 109.30; the immediate resistance level is located at 111.50.

BoJ’s most hawkish board member, Hajime Takata, on Thursday renewed his call for raising the benchmark interest rate, describing the nation’s once-frozen inflation trend as heated to the core. Takata further stated that the central bank must conduct further rate hikes in a gradual manner.

“I believe the bank should make a further gear shift and engage in communication that assumes that the price stability target is almost achieved,” said Takata.

Japan’s Tokyo Consumer Price Index (CPI) will be in the spotlight later on Friday. However, if the report shows softer-than-expected outcomes, this could drag the JPY lower and create a tailwind for the cross in the near term.

Technical Analysis:

In the daily chart, AUD/JPY is bullish in the near-term as price extends well above the rising 100-day exponential moving average, confirming a mature uptrend rather than a short-covering spike. The latest candles hold near the upper Bollinger Band around 111.30 while the middle band climbs through the 109.30 area, indicating persistent upside pressure and expanding volatility. RSI at 65.92 remains in bullish territory without extreme overbought conditions, suggesting buyers still control momentum despite the recent acceleration.

Initial support emerges at the Bollinger middle band near 109.30, which aligns with recent consolidation and would be the first area to test trend strength on a pullback. A deeper correction would expose secondary support closer to 107.50, where the lower band region converges with prior breakout territory. On the topside, immediate resistance sits just above the market at 111.50, marking the latest swing high within the upper band region, followed by a psychological barrier at 112.50 if bulls extend the advance.

(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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