AUD/JPY Price Forecast: Bullish tone remains intact above 97.00
The AUD/JPY cross extends the decline to around 97.10 during the Asian trading hours on Friday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) amid concerns over escalating US-China trade tensions and geopolitical uncertainties.
  • AUD/JPY attracts some sellers to near 97.10 in Friday’s Asian session.
  • The cross keeps the bullish view in longer term, but further downside cannot be ruled out with bearish RSI indicator. 
  • The key resistance level is seen at 98.50; the initial support level is located at 96.50.

The AUD/JPY cross extends the decline to around 97.10 during the Asian trading hours on Friday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) amid concerns over escalating US-China trade tensions and geopolitical uncertainties. However, political uncertainty in Japan could weigh on the JPY and act as a tailwind for the cross following the collapse of the ruling Liberal Democratic Party's (LDP) coalition with the Komeito. 

According to the daily chart, the positive view of AUD/JPY remains in place as the cross is well-supported above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) stands below the midline near 44.0, indicating bearish momentum. This suggests that further downside cannot be ruled out before positioning for any near-term AUD/JPY appreciation.

On the bright side, the first upside barrier for the cross emerges at 98.50, the high of October 16. The next resistance level is seen at 99.50, the high of October 14. Sustained trading above the mentioned level could see a rally to the 100.00 psychological level, en route to the upper boundary of the Bollinger Band of 100.35. 

On the downside, the crucial support level for AUD/JPY is located at 96.50, the 100-day EMA. The additional downside filter to watch is 96.15, the lower limit of the Bollinger Band. Any follow-through selling below this level could expose the 95.00-94.90 zone, representing the round mark and the low of August 4. 

AUD/JPY daily chart

Japanese Yen FAQs

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.

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.

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.

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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