AUD/JPY Price Forecast: Extends bearish spell below 111.50 as downside bias persists

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The AUD/JPY cross trades in negative territory around 111.25 during the early European trading hours on Friday.

AUD/JPY softens to near 111.25 in Friday’s early European session.
The cross keeps negative bias, with bearish RSI momentum.
The first upside barrier emerges at 112.25; the initial support level to watch is 111.15.

The AUD/JPY cross trades in negative territory around 111.25 during the early European trading hours on Friday. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) after Tokyo’s Consumer Price Index (CPI) inflation picked up for the first time in eight months, keeping the Bank of Japan (BOJ) on a trajectory to raise interest rates further.

Furthermore, traders are highly alert for currency intervention from Japanese authorities, which might underpin the JPY and cap the upside for the cross. Japan’s Chief Cabinet Secretary Minoru Kihara said on Tuesday that he will take appropriate action against the foreign exchange moves if needed.

Technical Analysis:

In the daily chart, AUD/JPY extends a bearish near-term tone as price holds below the 100-day moving average (MA) and the 20-period Bollinger middle band. The pair is edging closer to the 20-period Bollinger lower band support, while the Relative Strength Index (14) at 34.18 hovers just above oversold territory, hinting that downside momentum is still dominant but may be becoming stretched.

On the topside, a decisive daily close above the 100-day MA at 112.25 could pave the way to the Bollinger middle band at 112.95. The upper Bollinger band near 114.77 acts as a more distant cap.

On the downside, the immediate structural support sits at the Bollinger lower band around 111.15; a clear break below this floor would open the door to a deeper corrective phase, whereas holding above it could trigger a short-term bounce back toward the moving average cluster.

(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.