AUD/JPY Price Forecast: Weakens below 109.50, bearish outlook prevails under the 100-day SMA
- AUD/JPY softens to near 109.30 in Thursday’s early European session.
- Japanese officials signaled that authorities stand ready to intervene again to support the Japanese Yen.
- Negative outlook of the cross remains intact below the 100-day SMA, with bearish RSI momentum.
- The first upside barrier emerges at 110.25; the initial support level is located at 108.65.
The AUD/JPY cross trades in negative territory around 109.30 during the early European trading hours on Thursday. Traders remain on high alert for currency intervention from Japanese authorities to prop up the Japanese Yen (JPY).
Japan’s top currency diplomat Atsushi Mimura said on Thursday that recent currency moves have been excessively rapid. “It’s too early to forget what happened this summer,” said Mimura, while refraining from commenting on specific exchange-rate levels.
Meanwhile, Bank of Japan (BoJ) board member Toichiro Asada said that the central bank must be mindful of the expected effect of past rate increases on economy. Asada added that underlying inflation fluctuates around levels consistent with BoJ's price target. Dovish comments from Asada might cap the upside for the JPY and act as a tailwind for the cross.
Japan household demand for JGBs grows as BoJ credibility supports medium-term Yen upside
Analysts at MUFG highlight that official data are now confirming a meaningful shift in domestic demand for Japanese government bonds. They note that “the data confirming this pick-up in JGB buying by Japanese households comes from the MoF,” which “has an entire portion of its website dedicated to JGBs for individuals,” where issuance figures “show a marked pick-up in issuance to individuals with the November total for 3, 5 and 10-year totalling JPY 2,026bn, the largest single-month total.”
According to MUFG, policy speculation is adding to this emerging trend, with “growing speculation that the government will soon make changes to incentivise JGB buying by including individual JGB holdings in tax-free NISA accounts and/or removing these holdings from inheritance tax.” They describe these developments as “early signs of a shift in flows perhaps,” arguing that “the more examples of this we start to see the more compelling the case will become of a more sustained turnaround in the multi-year trend of yen weakness.” With “intervention likely halting the prospects to the upside, and confidence in the BoJ improving,” MUFG concludes that “the risks certainly look more skewed to yen strength over the medium term.”
BoJ’s Asada flags neutral rates but warns against aggressive tightening
BoJ’s Asada speech scores 3.2/10 on FXS Speechtracker, exactly in line with the speaker’s historic average, signaling no meaningful shift in tone. Emphasis on accommodative financial conditions, neutral policy rates, and the risk that further hikes could harm the economy and dampen core inflation points to a mildly dovish bias for the Yen despite acknowledgement that underlying inflation is around target.
Asada highlights that current price increases are not clearly demand-driven amid weak growth and consumption, and stresses that any future rate hikes must be cautious and gradual. The focus on using actual consumer inflation data to gauge overshoot risks, alongside concern that past and future hikes could curb inflation by slowing growth, reinforces a preference for a slow normalization path that limits upside for the Yen in the near term.
Technical Analysis: AUD/JPY retains a negative tone below the 100-day SMA
In the daily chart, AUD/JPY keeps a bearish near-term bias as spot holds beneath the 100-day simple moving average (SMA) and the Bollinger middle band. Price is also well below the Bollinger upper band, underscoring a market that remains capped by medium-term trend resistance, while the Relative Strength Index (RSI) at 42.97 stays in neutral-to-soft territory and hints at only modest downside momentum rather than outright exhaustion.
On the topside, initial resistance level appears at the Bollinger middle band near 110.25. A decisive break above this level could pave the way to the key upside barrier in the 110.70-110.75 zone, representing the 100-day SMA and the upper boundary of Bollinger band. The next hurdle to watch is the August 18 high of 113.61.
On the downside, the next meaningful support level is the lower limit of Bollinger band around 108.65, where sellers may start to hesitate if the pair extends its decline. The next contention level is located at the November 6 low of 108.24, followed by the February 13 low of 107.70.
(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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