AUD/JPY Price Forecast: Resumes upward journey above 100-day EMA near 95.50

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The AUD/JPY cross attracts some buyers to around 95.45 during the early European session on Friday. The uncertainty over the likely timing of the next interest rate hike by the Bank of Japan (BoJ) continues to drag the Japanese Yen (JPY) lower and acts as a tailwind for the cross.

AUD/JPY edges higher to around 95.45 in Friday’s early European session, adding 0.24% on the day.
Positive outlook of the cross prevails above the 100-day EMA, but further consolidation cannot be ruled out in the near term.
The immediate resistance level is seen in the 96.00-96.10 zone; the initial support level is located at 95.10.

Technically, AUD/JPY resumes its upward bias as the price crosses above the key 100-day Exponential Moving Average (EMA) on the daily chart. However, further consolidation cannot be ruled out, with the 14-day Relative Strength Index (RSI) hovering around the midline. This suggests neutral momentum in the near term.

The first upside target to watch for the cross is seen in the 96.00-96.10 region, the psychological level and the high of August 19. Extended gains could see a rally to 96.75, the high of August 13. Further north, the next hurdle is located at 97.10, the upper boundary of the Bollinger Band.

On the other hand, any follow-through selling below the 100-day EMA of 95.10 could see a drop to 94.40, the low of August 20. Sustained trading below the mentioned level could expose 93.97, the low of July 1. The additional downside filter to watch is 93.36, the low of June 16.

AUD/JPY Daily Chart

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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