AUD/JPY Price Forecast: Steadies near 111.50, bullish bias remains intact above key EMA

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The AUD/JPY cross trades on a flat note around 111.45 during the early European session on Tuesday. Hawkish rhetoric from the Reserve Bank of Australia (RBA) could provide some support to the Australian Dollar (AUD) against the Japanese Yen (JPY).

AUD/JPY holds steady near 111.45 in Tuesday’s early European session.
The cross keeps the positive vibe above the key 100-day EMA, with bullish RSI momentum.
The immediate resistance level emerges at 111.90; the first downside target to watch is 109.80.

RBA Governor Michele Bullock said on Tuesday that a rate hike is possible in March if the policy-making board decides ‌inflation expectations are at risk of becoming unanchored, and markets should be aware of that. Markets have priced in nearly a 30% chance of a quarter-point rise at the March meeting, while fully pricing a tightening for May, according to Reuters.

On the other hand, fears of a prolonged conflict in the Middle East could boost safe-haven currencies such as the JPY and act as a headwind for the cross. US military officials said on Tuesday that they have destroyed command posts of Iran’s Revolutionary Guards as well as Iranian air defense and missile launch sites since the start of the joint Israeli-US offensive on Saturday.

Technical Analysis:

In the daily chart, the near-term bias of AUD/JPY is bullish as price holds well above the rising 100-day exponential moving average near 105.10, confirming an established uptrend. The latest candle sits just under the upper Bollinger Band around 111.93, showing strong upside pressure with volatility expanding as the bands widen. RSI at 66.81 stays above its midline and out of overbought territory, indicating firm yet not exhausted bullish momentum and favoring continuation rather than immediate mean reversion.

Initial resistance emerges at the recent upper Bollinger Band area near 111.90, and a clear break above this zone would expose the next psychological barrier at 112.50. On the downside, first support aligns with the Bollinger middle band and prior congestion around 109.80, followed by stronger demand at the 107.70–108.00 region, where the lower band began to flatten on the last pullback. A deeper correction toward the 105.00–105.10 area would bring price into contact with the rising 100-day EMA, which protects the broader bullish structure as long as it holds.

(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.