AUD/JPY Price Forecast: Keep bullish vibe above 97.00

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AUD/JPY declines to around 97.15 in Tuesday’s early European session.
The positive outlook of the cross prevails above the 100-day EMA, with bullish momentum in the near term.
The first upside target is seen at 97.45; the initial support level is located at 96.31.

The AUD/JPY cross loses ground to near 97.15 during the early European session on Tuesday. The Japanese Yen strengthens against the Australian Dollar (AUD) after US President Donald Trump signed an executive order last week to lower the Japanese auto import tariff. Nonetheless, Japan's Prime Minister Shigeru Ishiba announced his resignation over the weekend, raising concerns over political uncertainty in Japan. This could weigh on the JPY in the near term.

Technically, the constructive outlook of the cross remains in play, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily chart. Additionally, the upward momentum is supported by the 14-day Relative Strength Index (RSI), which stands above the midline near 62.80. This indicates bullish momentum in the near term.

The immediate resistance level for AUD/JPY emerges at 97.45, the high of September 8. A run of green candles and steady trading above the mentioned level could open the door for a move toward 98.45, the high of January 27. The next hurdle is seen at 99.00, a round mark.

On the flip side, if the cross draws in sellers and more red candlesticks show up, the price could head right back to 96.31, the low of September 5. Sustained trading below this level could expose 95.35, the 100-day EMA. The next contention level is located at 94.82, the lower limit of the Bollinger Band.

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.