AUD/JPY Price Forecast: Positive outlook remains intact above 105.50
- AUD/JPY softens to around 105.65 in Monday’s early European session.
- Potential currency intervention from Japanese authorities supports the Japanese Yen against the Aussie.
- The first resistance level emerges at 106.48; 105.25 will offer some comfort to buyers.
The AUD/JPY cross trades in negative territory near 105.65 during the early European trading hours on Monday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) as Japanese officials warn of currency intervention.
Japan's Finance Minister Satsuki Katayama said on Friday that she would not rule out any options to counter weakness in the Japanese Yen, including coordinated intervention with the United States.
On the other hand, political uncertainty due to speculation of a snap election and plans for aggressive fiscal spending could add to market uncertainty and weigh on the JPY in the near term. Japanese Prime Minister Sanae Takaichi plans to dissolve parliament next week and call a snap parliamentary election as she seeks public backing for her spending plans.
Technical Analysis:
In the daily chart, AUD/JPY holds above the rising 100-day EMA at 101.60, keeping the broader uptrend intact. The average’s upward slope supports buying on pullbacks. RSI at 59.89 is neutral-to-bullish, indicating steady momentum. Pullbacks could be cushioned by the 20-day middle Bollinger band at 105.25, with the trend bias remaining positive while above the average.
Price trades north of the middle band and leans toward the upper Bollinger Band, highlighting persistent bullish pressure. The bands have narrowed, signaling reduced volatility and a potential breakout setup. Resistance sits at the upper band at 106.48. A close above resistance could extend the advance, whereas a drop back below the middle band would open a corrective phase toward the lower band at 104.00.
(The technical analysis of this story was written with the help of an AI tool.)
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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