AUD/JPY Price Forecast: Loses ground below 113.00, bullish vibe remains intact

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The AUD/JPY cross loses traction to around 112.90 during the early European session on Wednesday. Japan's stronger-than-expected Gross Domestic Product (GDP) growth data for the first quarter (Q1) underpins the Japanese Yen (JPY) against the Australian Dollar (AUD).

AUD/JPY softens to near 112.90 in Wednesday’s early European session.
The cross keeps a bullish vibe, but further consolidation cannot be ruled out as RSI has cooled below the midline.
The first upside barrier emerges at 113.65; the initial support level to watch is 112.45.

The Japanese economy grew at an annualized 2.1% in Q1 of 2026, according to preliminary Cabinet Office data released on Tuesday. This figure followed 1.3% growth prior, above the market consensus of 1.7%. Meanwhile, Japan’s GDP expanded 0.5% QoQ in Q1, compared to a 0.3% growth seen in Q4 of 2025. This figure came in stronger than the expectation of a 0.4% expansion.

On the Aussie front, the Reserve Bank of Australia (RBA) minutes showed on Tuesday that eight of nine board members backed the May rate hike to 4.35%, citing rising inflation risks from the Gulf conflict. One member preferred to await further data.

However, RBA Meeting Minutes highlighted growing concerns that global energy shocks and Middle East tensions could fuel domestic inflation and hurt broader economic growth. This, in turn, might cap the upside for the AUD against the JPY.

Technical Analysis:

In the daily chart, AUD/JPY holds well above the 100-day simple moving average (SMA), keeping the broader structure constructive despite price now sitting just under the Bollinger middle band, which acts as the first cap. A softening Relative Strength Index (RSI) around 46 hints that upside momentum has cooled without yet overturning the prevailing uptrend.

On the topside, initial resistance is seen at the Bollinger middle band near 113.65, with the upper band around 114.88 marking a stronger barrier if bulls regain control. On the downside, immediate support is seen at the lower Bollinger band at 112.45, ahead of the March13 low of 111.47, while the 100-day SMA at 110.52 remains a deeper but important floor guarding the broader bullish bias.

(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.