AUD/JPY Forecast: Drifts higher above 114.00, bullish momentum persists above 100-day EMA

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The AUD/JPY cross gains momentum to around 114.05 during the early European session on Wednesday. The Australian Dollar (AUD) edges higher against the Japanese Yen (JPY) on a hawkish tone from the Reserve Bank of Australia (RBA).

AUD/JPY drifts higher to near 114.05 in Wednesday’s Asian session.
The cross keeps the positive outlook above the 100-day EMA, with bullish RSI momentum.
The first upside barrier emerges at 115.35; the initial support level is seen at 111.90.

US President Donald Trump said on Tuesday that he is extending the ceasefire with Iran at Pakistan’s request while awaiting a “unified proposal” from Tehran, even as the US military maintains its blockade of Iranian ports. Traders will closely monitor the developments surrounding US-Iran peace talks. Any signs of prolonged conflict between two countries or in the Middle East could boost a safe-haven currency such as the JPY and create a headwind for the cross.

Technical Analysis:

In the daily chart, AUD/JPY holds a clear bullish bias as spot remains well above the 20-day simple moving average from the Bollinger Bands and the 100-day exponential moving average, keeping the broader uptrend intact. Price is pushing toward the upper Bollinger Band, while the Relative Strength Index at 68.62 hovers just below overbought territory, suggesting strong but increasingly stretched upside momentum.

On the topside, immediate resistance aligns with the Bollinger upper band at 115.35, where buyers could begin to take profit if momentum fades. On the downside, initial support is seen at the Bollinger middle band near 111.90, with a deeper pullback exposing a demand cluster around the 100-day EMA at 108.55 and the lower Bollinger Band at 108.45, which should act as a firm medium-term floor while the bullish structure prevails.

(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.