AUD/JPY Price Forecast: Weakens to near 112.50, but uptrend remains constructive
- AUD/JPY weakens to near 112.62 in Thursday’s early European session.
- The cross keeps a constructive bullish bias, but further consolidation cannot be ruled out with neutral RSI momentum.
- The initial support level is located at 112.55; the immediate resistance level to watch is 113.55.
The AUD/JPY cross trades in negative territory around 112.62 during the early European trading hours on Thursday. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) amid escalating tensions in the Middle East after US President Donald Trump said an interim agreement to end the war with Iran was “over.”
Traders are also on high alert for possible intervention from Japanese officials. “The yen’s current weakness is excessive and fails to reflect the strong fundamentals of the Japanese economy, a misalignment that could prompt major central banks to launch coordinated intervention,” said Michael Nizard, head of multi-asset and overlay at Edmond de Rothschild Asset Management.
Technical Analysis:
In the daily chart, AUD/JPY holds above the 100-day moving average (MA) and the Bollinger Bands’ 20-day simple moving average (SMA), which together suggest a constructive bullish bias after the recent pullback. Price also remains comfortably above the lower Bollinger band, while the upper band marks the next upside objective as the pair grinds higher; the Relative Strength Index (14) near 50 keeps momentum neutral, hinting at consolidation rather than exhaustion for now.
On the downside, initial support is seen at the 100-day MA at 112.55, followed by the Bollinger midline around 112.42 and then the lower band at 111.15, where buyers would likely defend the broader uptrend. On the other hand, the first upside barrier emerges at the June 16 high of 113.55. The next hurdle is seen at the upper Bollinger band at 113.70, en route to the May 13 high of 114.74.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
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.
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.
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.
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.
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