AUD/JPY Price Forecast: Declines below 113.50, while maintaining bullish near‑term structure

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The AUD/JPY cross trades in negative territory around 113.45 during the early European trading hours on Thursday. Verbal intervention from Japanese authorities provides some support to the Japanese Yen (JPY) against the Australian Dollar (AUD).

AUD/JPY softens to near 113.45 in Thursday’s early European session.
The cross maintains a constructive outlook, with bullish RSI momentum.
The immediate resistance level is seen at 113.70; the initial support level to watch is 112.65.

Japan’s Finance Minister Satsuki Katayama said on Thursday that the authorities are ready to take appropriate action on currency anytime as needed. She added that the officials will track market trends and economic data to ensure fiscal sustainability.

Senior officials from the Bank of Japan (BoJ) noted that a delay in stimulus adjustment amid high inflation risk could trigger an economic downturn. However, a Reuters survey showed earlier Thursday that nearly half of Japanese firms are experiencing negative business impact from the BoJ's interest rate hikes, with higher borrowing costs hurting bottom lines and discouraging capital investment.

Technical Analysis:

In the daily chart, AUD/JPY holds a bullish near-term bias as price remains above the 100-day Simple Moving Average (SMA) and the Bollinger Bands 20-period middle band, suggesting the broader uptrend is still supported despite recent consolidation. The latest Relative Strength Index (14) reading around 57 keeps momentum on the constructive side, hinting that buyers retain control as long as the pair stays comfortably above the lower Bollinger band at 111.10.

On the topside, initial resistance emerges at the Bollinger upper band around 113.70, where a sustained break would open the door to the May 13 high of 114.74.

On the downside, the first layer of support is seen at the 100-day SMA at 112.65, followed by the Bollinger middle band near 112.40, while a deeper pullback towards the lower band at 111.10 would be needed to seriously challenge the prevailing bullish structure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

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.