AUD/JPY Price Forecast: Constructive outlook prevails, first upside barrier emerges near 106.50

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The AUD/JPY cross loses ground to near 106.10 during the early Asian session on Friday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) on the intervention fears from Japanese officials.

AUD/JPY softens to around 106.10 in Friday’s early European session.
Japan's finance minister warns that all options are open to aid the currency.
The cross keeps the bullish vibe, with the first upside barrier to watch at 106.50.

Japanese Finance Minister Satsuki Katayama on Friday reiterated her warning that all options, including direct currency intervention, are available for dealing with recent weakness in the JPY.

On the other hand, concerns that Japanese Prime Minister Sanae Takaichi will have more leeway to implement more fiscally expansionist policies could weigh on the JPY and create a tailwind for thecross. Takaichi plans to dissolve parliament next week and call a snap parliamentary election to consolidate her power.

Technical Analysis:

In the daily chart, AUD/JPY holds well above the rising 100-day EMA at 101.52, keeping the broader bullish trend intact. The average has advanced consistently, and dips are supported while price remains above this gauge. Price sits between the upper Bollinger Band at 106.52 and the middle band at 105.21, reflecting firm buying interest near the highs. Bands have widened in recent sessions, signaling elevated momentum. RSI (14) prints 66, showing strong but not overbought momentum.

The upper Bollinger Band at 106.52 caps near-term advances. A daily close above it could unlock further gains, while failure to break would keep consolidation toward the support range at 105.21–103.90. Overall, the technical backdrop favors dip-buying within the band channel as long as the EMA slope remains higher.

(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.