AUD/JPY Price Forecast: Retains bullish momentum above 100-day EMA despite threat of intervention

• AUD/JPY weakens to around 106.55 in Monday’s early European session. 

• Markets are on heightened alert for Japanese government intervention. 

• The cross maintains a positive outlook above the 100-day EMA, with bullish RSI momentum. 

• The initial support level to watch is 105.90; the first upside barrier emerges at 107.85. 

The AUD/JPY cross attracts some sellers near 106.55 during the early European session on Monday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) amid the threat of intervention from Japanese authorities. 

On Friday, traders reported that the Federal Reserve Bank of New York had contacted financial institutions to ask about the Japanese Yen’s exchange rate. This action has sparked intervention speculation and lifted the JPY across the board. 

Furthermore, Japan’s Prime Minister Sanae Takaichi said on Sunday that the government will take necessary steps against speculative and abnormal market moves. Nonetheless, she didn’t specify which market her remarks were referring to.  

"The weak yen has become problematic ... in the sense that it's unpopular with the public, because the weak yen is seen as contributing to the inflation problem. So perhaps ... this intervention threat itself is an attempt to check the yen weakness and prevent it from becoming a political issue,” said Moh Siong Sim, FX strategist at OCBC Singapore. 

Traders brace for the Australian December Consumer Price Index (CPI) inflation data on Wednesday for fresh impetus. Any signs of hotter inflation in Australia could help limit the Aussie’s losses in the near term.

Technical Analysis:

In the daily chart, AUD/JPY holds well above the 100-day EMA at 102.14, whose rising slope supports a firm bullish bias. The distance to this average underscores trend strength while marking dynamic support. RSI at 57.69 has eased from prior stretched readings but remains above the 50 line, preserving positive momentum. Price trades in the upper half of the Bollinger envelope as bands widen modestly, indicating persistent buying pressure; the middle band at 105.90 underpins, while the upper band at 107.85 caps the immediate topside.

Holding above the middle band would keep the advance intact and keep focus on a test of the upper Bollinger, where a decisive close could extend the move. A break beneath the mid-band would expose the lower Bollinger Band at 103.97, with the 100-day EMA at 102.14 acting as trend-defining support if pullbacks deepen.