AUD/JPY Price Forecast: Maintains bullish tone above 108.50, Australian jobs data in focus

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The AUD/JPY cross holds steady near 108.55 during the early European trading hours on Wednesday. Growing optimism around Japanese Prime Minister Sanae Takaichi’s pro-stimulus policy agenda could support the Japanese Yen (JPY) and act as a headwind for the cross.

AUD/JPY trades flat around 108.55 in Wednesday’s early European session.
The cross keeps the bullish vibe above the key 100-day EMA.
The first upside barrier emerges at 110.53, while an initial support level is seen at 108.50.

Takaichi presented details of her “smart stimulus” fiscal plan, saying that it is based on disciplined calculations and is not aimed at driving uncontrolled inflation, but rather at strengthening economic growth. Her comments ease some concerns about public debt sustainability.

Traders might turn cautious ahead of the Australian employment report for January, which is due on Thursday. Any signs of improvement in the Australian labor market could boost the Aussie against the Japanese Yen (JPY) in the near term.

Technical Analysis:

In the daily chart, AUD/JPY holds above the 100-day EMA, maintaining a bullish bias in the medium term. Pullbacks could find dynamic support near that average, keeping the broader uptrend intact. RSI at 55.65 sits above the 50 line, showing steady momentum without overbought pressure.

Price hovers around the Bollinger 20-period middle band at 108.50. The bands have narrowed, signaling volatility compression that would precede a directional breakout. A topside push could extend toward the upper band at 110.53, while a close back below the mid-line at 108.50 would risk a pullback to the lower band at 106.47.

(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.