AUD/JPY Price Forecast: Strengthens above 113.50 as bullish momentum persists above 100-day SMA
- AUD/JPY gathers strength to around 113.55 in Friday’s early European session.
- The cross maintains a positive tone above the 100-day SMA, with bullish RSI momentum.
- The first upside barrier emerges at 114.40; the initial support level to watch is 113.10.
The AUD/JPY cross trades in positive territory near 113.55 during the early European session on Friday. The Australian Dollar (AUD) strengthens against the Japanese Yen (JPY) despite the cooling labor market. The minutes of the Reserve Bank of Australia (RBA) meetings will be released next Tuesday.
Australia's Unemployment Rate ticked up to 4.5% in July from 4.4% in June, the Australian Bureau of Statistics showed on Thursday. Meanwhile, employment unexpectedly fell by 15,800 jobs in July, versus a rise of 80,200 prior, worse than the market expectations of a 15,000 growth. The weaker jobs data has led markets to scale back expectations for further aggressive interest rate hikes by the Reserve Bank of Australia (RBA).
“The rise in unemployment marginally strengthens the case for the RBA to hold, particularly given broader signs of weakness in the economy,” said Ray White chief economist Nerida Conisbee.
Ashwin Binwani, Alpha Binwani Capital’s founder, said institutional investors remained positioned in carry trades against a basket of G10 currencies, led by the AUD. There are also signs that some traders are rebuilding bearish bets on the JPY, as the impact of the intervention has faded.
Standard Chartered pulls forward BoJ hike call to September
Analysts at Standard Chartered have brought forward their expectations for the Bank of Japan’s next policy move, now projecting that the BoJ will “hike by 25bps on 18 September from October previously.” This revision marks a shift in the bank’s anticipated timing of Japan’s rate normalisation, underscoring a slightly more front-loaded tightening profile than previously assumed.
Technical Analysis: The bullish tone of AUD/JPY remains intact
In the daily chart, AUD/JPY retains a constructive bullish bias as it holds above the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line, suggesting underlying demand on dips after the latest pullback from recent highs. The Relative Strength Index (RSI) at 58.12 stays in positive territory but below overbought levels, hinting at steady bullish momentum without signs of exhaustion yet.
On the topside, initial resistance emerges at the July 22 high of 114.40, en route to the upper Bollinger Band near 114.75. The next hurdle to watch is the 115.00 psychological level, where buyers could face profit-taking and short-term supply.
On the downside, immediate support is seen at the 100-day SMA at 113.10, followed by the Bollinger middle band at 112.45. A deeper setback would expose the August 10 low of 111.63, and then the lower Bollinger Band as a more distant support level around 110.15.
(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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