AUD/JPY Price Forecast: Holds steady above 114.00, bullish trend stays intact above key support

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AUD/JPY flat lines around 114.10 in Wednesday’s early European session.
The cross maintains a positive tone above the key 100-day EMA, with bullish RSI momentum.
The first upside barrier emerges at 114.85; the initial support level to watch is 113.75.

The AUD/JPY cross holds steady near 114.10 during the early European session on Wednesday. Traders prefer to wait on the sidelines ahead of the meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing on Thursday and Friday. Any positive developments surrounding the Trump-Xi summit could lift the China-proxy Aussie in the near term.

Furthermore, a hawkish monetary policy stance from the Reserve Bank of Australia (RBA) might contribute to the Australian Dollar’s (AUD) upside. "Our economists expect the RBA to remain on hold in a 'wait-and-see' mode; however, further domestic fiscal support could increase the likelihood of additional tightening,” said HSBC economists.

However, fears of further currency intervention from Japanese authorities could underpin the Japanese Yen (JPY) and cap the upside for the cross. Japanese Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent confirmed close synchronization to manage currency volatility.

Technical Analysis:

In the daily chart, AUD/JPY holds a constructive bullish bias as it consolidates above the 20-day Bollinger simple moving average (SMA) and well above the 100-day SMA, suggesting the broader uptrend remains intact despite the recent pullback from the highs. The Relative Strength Index (14) at about 60 sits in positive territory without yet signalling overbought conditions, hinting that upside momentum is still present but not overstretched.

On the topside, immediate resistance is aligned with the upper Bollinger band, now crossing near 114.85, and a daily close above this barrier would open the way for another leg higher in the prevailing uptrend. On the downside, initial support is seen at the mid-Bollinger band around 113.75, ahead of the lower band near 112.65, while the 100-day SMA at 110.05 remains a deeper, more strategic floor protecting the broader bullish structure.

(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.