AUD/JPY Price Forecast: Gains ground above 110.00 as mild bullish bias persists

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The AUD/JPY cross attracts some buyers to near 110.20 during the Asian trading hours on Monday. The Australian Dollar (AUD) edges higher against the Japanese Yen (JPY) on expectations of further interest rate hikes from the Reserve Bank of Australia (RBA).

AUD/JPY drifts higher to around 110.20 in Monday’s Asian session.
The cross keeps a mildly bullish vibe, but further consolidation cannot be ruled out amid neutral RSI momentum.
The first upside barrier emerges at 111.25; initial support is located at 110.00.

However, the upside for the cross might be limited as escalating tensions in the Middle East could boost safe-haven demand for the JPY. Iran’s central military command on Monday warned of far more “devastating and widespread” retaliation if its adversaries hit civilian targets. The statement came after US President Donald Trump threatened to destroy Iran’s power plants and bridges if Tehran didn’t make a deal to fully reopen the Strait of Hormuz.

Technical Analysis:

In the daily chart, the near-term bias of AUD/JPY is mildly bullish as price holds above the rising 100-day exponential moving average near 107.35, extending the broader uptrend despite the latest pullback. The RSI eases to the midline, suggesting that further consolidation cannot be ruled out in the near term.

Immediate resistance emerges near the Bollinger middle band of 111.25. Above that, the next upside reference aligns near the March 19 high of 112.61, en route to the upper Bollinger Band of 113.65. On the downside, initial support is seen at the 110.00 psychological level. A deeper setback would target the lower limit of the Bollinger Band near 108.75, followed by the 100-day EMA around 107.35.

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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