AUD/JPY Price Forecast: Softens to near 111.50 on intervention fears and bearish technical bias
- AUD/JPY weakens to near 111.50 in Thursday’s early European session.
- The cross keeps the negative bias in the near term below the 100-day SMA, with bearish RSI momentum.
- The first downside target to watch is 111.30; the immediate resistance level emerges at 112.25.
The AUD/JPY cross trades in negative territory around 111.50 during the early European trading hours on Thursday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) amid fears of currency intervention from Japanese authorities. Traders await Japan’s Tokyo Consumer Price Index (CPI) inflation report for June, which is due later on Friday.
Japan’s Chief Cabinet Secretary Minoru Kihara said on Tuesday that he will take appropriate action against the foreign exchange moves if needed. On Thursday, Bank of Japan (BoJ) board member Naoki Tamura stated that Japan has already achieved the BoJ’s 2% inflation target and the central bank must raise rates near neutral to avoid underlying inflation from overshooting above target.
Australia’s Unemployment Rate fell to 4.4% in May from 4.5% in April, the Australian Bureau of Statistics (ABS) revealed on Thursday. The figure came in line with the market expectations. Meanwhile, Employment Change came in at 40.3K in May from -40.7K in the previous reading (revised from -18.6K), compared with the forecast of a 25K increase.
Money markets have priced in nearly an 80% chance of an interest rate hold by the Reserve Bank of Australia (RBA) in August after Thursday’s employment report.
Technical Analysis:
In the daily chart, AUD/JPY holds below the 100-day Simple Moving Average (SMA) and the 20-day Bollinger middle band, keeping the near-term bias bearish. Price is only marginally above the lower Bollinger band, while the Relative Strength Index (14) slipping to around 35 hints at persistent downside pressure with conditions approaching oversold rather than signaling a solid base.
On the downside, immediate support is located at the lower Bollinger band around 111.30; a decisive break there would open the door to a deeper slide toward the 111.00 psychological level. On the topside, initial resistance comes at the 100-day SMA at 112.25, followed by the 20-day Bollinger middle band near 113.10; only a daily close back above these hurdles would start to ease the current bearish tone, with the upper Bollinger band around 114.90 then turning into the next upside objective.
(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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