AUD/JPY Price Forecast: Jumps to near two-week high above 110.50, bullish momentum prevails

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The AUD/JPY cross jumps to near its two-week high around 110.70 during the early European session on Wednesday. The Aussie strengthens against the Japanese Yen (JPY) on hotter-than-expected Australian inflation data, which raises bets for a May rate hike from the Reserve Bank of Australia (RBA).

AUD/JPY rises to near 110.70 in Wednesday’s early European session.
The positive outlook for the cross prevails above the 100-day EMA, with bullish RSI momentum indicator.
The initial support level is located at 109.10; the first upside barrier emerges at 111.00.

Data released by the Australian Bureau of Statistics (ABS) on Wednesday showed that the Consumer Price Index (CPI) climbed by 3.8% YoY in January, versus a 3.8% increase in December. The market consensus was for 3.7% growth in the reported period. Meanwhile, the monthly Consumer Price Index rose 0.4% in January, compared to the previous reading of 1.0%.

Technical Analysis:

In the daily chart, the near-term bias for AUD/JPY is bullish as price extends well above the 100-day exponential moving average, confirming a sustained uptrend and strong trend following the recent breakout. The latest Bollinger Bands show price pressing toward the upper band, signaling firm buying pressure and elevated volatility rather than mean reversion. RSI around 65 remains in positive territory but below extreme overbought readings, indicating bullish momentum is intact with no clear exhaustion signal yet.

Immediate support emerges at the rising Bollinger middle band near 109.10, where pullbacks could regroup buyers. A deeper setback would target the 107.00 zone, ahead of the 100-day EMA around 104.60, which defines the broader bullish line in the sand. On the topside, initial resistance comes at 111.00, with a sustained break opening the way toward the 112.50 region as the next upside objective. As long as price holds above 108.50, the path of least resistance remains to the upside.

(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.