AUD/JPY Price Forecast: Softens below 113.50 on fresh intervention rhetoric, while staying bullish

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The AUD/JPY cross trades in negative territory around 113.35 during the early European trading hours on Friday. Fears of possible intervention from Japanese officials provide some support to the Japanese Yen (JPY) against the Australian Dollar (AUD).

AUD/JPY weakens to near 113.35 in Friday’s early European session.
Japan’s Katayama warned of possible intervention in the currency market.
The cross maintains a constructive tone above the 100-day SMA, with bullish RSI momentum.
The first upside barrier emerges at 113.80; the initial support level to watch is 112.70.

Japan’s Finance Minister Satsuki Katayama delivered verbal intervention again on Friday, saying that "if it becomes necessary, we will take decisive action at any time.” This remark came ahead of a holiday weekend in Japan, a timing that in the past has been used for late-night interventions.

The Bank of Japan (BoJ) will meet later this month after hiking interest rates to the highest level in three decades in June. The Japanese central bank is anticipated to raise rates again before the end of the year, but it isn’t expected to move at the July policy meeting.

Technical Analysis:

In the daily chart, AUD/JPY holds a constructive bullish bias as spot price advances above both the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line, hinting at firm underlying demand. The Relative Strength Index (14) at 56.03 stays in positive territory without reaching overbought levels, suggesting that the latest upswing still has room to extend while prices remain supported above these key averages.

On the topside, immediate resistance is defined by the Bollinger upper band around 113.80, where fresh supply could slow the rally. The next hurdle to watch is the May 13 high of 114.74. On the downside, initial support is seen at the 100-day SMA at 112.70, followed by the Bollinger middle band at 112.45 and the lower band near 111.05, levels that together outline the main downside cushions in case of a corrective pullback.

(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.