AUD/JPY Price Forecast: Weakens to near 112.50, near-term outlook remains bearish
- AUD/JPY softens to near 112.55 in Friday’s early European session.
- The cross keeps a bearish vibe, but further consolidation cannot be ruled out in near term amid neutral RSI momentum.
- The first upside barrier emerges at 112.70; the initial support level to watch is 111.63.
The AUD/JPY cross trades in negative territory around 112.55 during the early European trading hours on Friday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) as traders remain on high alert for further currency intervention from Japanese authorities.
Japan's former top currency diplomat, Mitsuhiro Furusawa, said on Thursday that Tokyo may conduct joint JPY intervention with the United States "at any time" and should signal the chance of faster-than-expected interest rate hikes to arrest the currency's slide.
Markets currently see a 76% chance of the Bank of Japan (BoJ) rate hike in September, according to Tokyo Tanshi data, compared with 24% on July 30.
Yen undervaluation seen easing after Japan–US intervention
DBS Group Research notes that the Japanese Yen’s mispricing has started to correct in the wake of recent official action. According to the bank, “the Japanese yen's (JPY) undervaluation has narrowed from record levels following Japan's second FX market intervention this year, which was conducted in co-ordination with the US,” underscoring the impact of rare, joint efforts by Japan and the US to rein in excessive JPY weakness.
Technical Analysis: AUD/JPY remains capped under the 100-day SMA
In the daily chart, AUD/JPY holds below the Bollinger middle band and the 100-day moving average, keeping the near-term bias bearish as price is capped beneath these overlapping resistance lines. The Relative Strength Index (14) at 50.43 is neutral, suggesting a consolidative tone rather than strong directional momentum while downside risks remain dominant as long as the cross stays under the 100-day average.
On the topside, immediate resistance is clustered around the Bollinger middle band at 112.70, followed by the 100-day moving average at 112.90. A daily close above these levels would be needed to ease selling pressure and open the way toward the July 27 high of 114.67, en route to the Bollinger upper band near 115.40.
On the downside, initial support emerges at the August 10 low of 111.63. The key contention level is seen at the Bollinger lower band at 110.00, where a break would signal a deeper corrective phase toward the lower end of the recent range.(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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