AUD/JPY Price Forecast: Gains ground to near 112.50, uptrend holds above 100-day SMA

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The AUD/JPY cross gains ground near 112.40 during the early European session on Thursday, bolstered by the hawkish stance of the Reserve Bank of Australia (RBA).

AUD/JPY drifts higher to around 112.40 in Thursday’s early European session.
Broader positive outlook prevails above the 100-day SMA, but temporary sell-off cannot be ruled out with bearish RSI momentum.
The first upside barrier emerges at 113.62; the initial support level is located at 112.25.

The AUD/JPY cross gains ground near 112.40 during the early European session on Thursday, bolstered by the hawkish stance of the Reserve Bank of Australia (RBA). Macquarie analysts said the Australian central bank is likely to keep the Official Cash Rate (OCR) unchanged next week while delivering a hawkish message that reinforces market expectations for an interest-rate increase in August.

Nonetheless, the potential upside for the cross might be limited amid intervention fears from Japanese authorities. Finance Minister Satsuki Katayama issued a verbal warning, saying that the government is monitoring speculative moves and remains prepared to take decisive measures to prevent the domestic currency weakness.

Technical Analysis:

In the daily chart, AUD/JPY holds above the 100-day Simple Moving Average (SMA), keeping the broader uptrend technically supported despite the latest pullback toward the lower Bollinger Band at 112.26. However, the Relative Strength Index (14) around 39 leans toward bearish momentum, suggesting recent downside pressure is not yet fully spent even as price clings to its underlying trend support.

On the topside, initial resistance is located at the Bollinger middle band near 113.62, with the upper band up at 115.00 acting as the next hurdle if buyers regain control. On the downside, immediate support is reinforced by the lower Bollinger Band at 112.25, ahead of the more strategic 100-day SMA at 111.75, where a sustained break would hint at a deeper corrective phase within the broader bullish structure.

(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.