AUD/JPY Price Forecast: Softens below 114.00, while bullish bias prevails above 100-day EMA

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The AUD/JPY cross edges lower to around 113.95 during the early European session on Tuesday. The Japanese Yen (JPY) gathers strength against the Australian Dollar (AUD) as markets turn cautious ahead of potential US-Iran peace talks.

AUD/JPY loses ground to near 113.95 in Tuesday’s early European session.
The constructive outlook of the cross remains intact above the 100-day EMA, with bullish RSI momentum.
The initial support level is located at 111.75, while the first upside barrier emerges at 115.10.

Bloomberg reported on Tuesday that US Vice President JD Vance will travel to Pakistan later on Monday to resume negotiations, “either Tuesday night or Wednesday morning.” Vance is expected to be joined by Jared Kushner and special envoy Steve Witkoff.

The fate of Iran peace talks remained uncertain as US President Donald Trump said earlier on Tuesday that he’s not likely to extend the two-week ceasefire with Iran, increasing the urgency for negotiators to reach a deal to end the war.

Traders will closely monitor the Middle East developments and the US-Iran negotiations. Any signs of prolonged conflict could boost a safe-haven currency such as the Japanese Yen (JPY) and act as a headwind for the cross.

Technical Analysis:

In the daily chart, AUD/JPY retains a bullish near‑term bias as price holds well above the 20‑day Bollinger simple moving average and the 100‑day exponential moving average (EMA), underscoring a firmly supported uptrend. The upper Bollinger band marks the immediate topside cap, while the Relative Strength Index (14) at 67.56 hovers just below overbought territory, suggesting strong but stretched upside momentum.

On the downside, initial support comes at the Bollinger middle band around 111.75, where a pullback could attract dip‑buyers. A deeper correction would expose the next demand area clustered around the 100‑day EMA at 108.51 and the lower Bollinger band at 108.41. On the topside, a sustained break above the upper band at 115.10 would open the door to further gains, although the overextended momentum backdrop hints that upside could slow ahead of that barrier.

(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.