AUD/JPY Price Forecast: Constructive outlook remains in play above 97.50
- AUD/JPY edges lower to around 97.80 in Wednesday’s early European session.
- The cross maintains a positive outlook, with the bullish RSI condition.
- The immediate resistance level is seen at 98.65; the initial support level is located at 97.01.
The AUD/JPY cross extends the decline to near 97.80 during the Asian trading hours on Wednesday. The growing expectation that the Bank of Japan (BoJ) will stick to its policy normalization path despite domestic political uncertainty supports the Japanese Yen (JPY) against the Australian Dollar (AUD). Also, the cautious mood in the financial markets contributes to the JPY’s upside.
Technically, the positive view of AUD/JPY remains in play as the cross is well-supported above the key 100-day Exponential Moving Average (EMA) on the daily chart. The path of least resistance is to the upside, with the 14-day Relative Strength Index (RSI) standing above the midline near 62.65. This suggests the bullish momentum in the near term.
On the bright side, the key upside barrier for the cross emerges at 98.65, the upper boundary of the Bollinger Band. Further north, the next hurdle is seen at 99.17, the high of January 7. A decisive break above this level could pick up more momentum and aim for the 100.00 psychological level.
On the other hand, the low of September 10 at 97.01 acts as an initial support level for AUD/JPY. Any follow-through selling below this level could expose 96.31, the low of September 5. The additional downside filter to watch is 95.70, the 100-day EMA.
AUD/JPY daily chart
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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