AUD/JPY Price Forecast: Weakens below 111.00, remains capped below 100-day SMA
- AUD/JPY weakens to near 110.75 in Tuesday’s early European session.
- The cross keeps a negative tone under the 100-day SMA, with bearish RSI momentum.
- The first upside barrier emerges at 111.63; the initial support level is located at 110.00.
The AUD/JPY cross trades in negative territory around 110.75 during the early European trading hours on Tuesday. A slew of hawkish comments from the Bank of Japan (BoJ) policymakers have cemented views that the BoJ will raise interest rates this month, supporting the Japanese Yen (JPY) against the Australian Dollar (AUD).
BoJ board member Hajime Takata said last week that the central bank could take a more aggressive approach than expected. He said a 25-basis-point hike “is not necessarily set in stone,” and that generally speaking, back-to-back rate hikes would be a possibility, too.
The Japanese central bank is expected to raise its benchmark interest rate by 25 basis points (bps) to 1.25% at its upcoming policy meeting on September 17–18.
BoJ hawkish signals keep Yen bulls on the front foot
Analysts at MUFG highlight that the recent shift in tone from the BoJ was underscored by policy board member Hajime Takata, who told local business leaders on 2 September that the Bank needed to "conduct rate hikes nimbly" and should not be "bound by particular intervals or ranges anticipated in the markets." MUFG notes that, even though Takata subsequently pushed back against the prospect of a larger move at the upcoming meeting, his remarks have nevertheless encouraged investors to contemplate not only a faster pace of tightening but also the possibility of "larger individual moves" from the BoJ.
Technical Analysis: AUD/JPY remains bearish below the key 100-day SMA
In the daily chart, AUD/JPY remains under a dense band of resistance, with price lodged below the 100-day simple moving average (SMA) and even the Bollinger Bands’ (20, 2) lower band, reinforcing a capped, bearish near-term tone. The Relative Strength Index (14) at 32.65 hovers just above oversold territory, suggesting downside momentum is still dominant but increasingly stretched.
On the topside, the immediate resistance level emerges at the August 10 low of 111.63. The key hurdle to watch is in the 113.15-113.25 zone, representing the the 100-day SMA and the Bollinger midline. Beyond that, the upper Bollinger band at roughly 115.35 marks a more distant barrier.
On the flip slide, the 110.00 psychological level acts as an initial support level for the cross. Further south, the next downside target to watch is the August 3 low of 109.24.
(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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