AUD/JPY Price Forecast: Declines below 110.00, technical bias stays bearish

• AUD/JPY trades on a softer note near 109.70 in Monday’s early session.
• The negative outlook of the cross remains intact, with a bearish RSI condition.
• The first upside barrier emerges at 100.00; the initial support level is seen at 109.20.

The AUD/JPY cross trades in negative territory around 109.70 during the early European session on Monday. The Australian Dolllar (AUD) softens against the Japanese Yen (JPY) as bets of the Reserve Bank of Australia (RBA) raising interest rates in November have fallen sharply after the latest Consumer Price Index (CPI) came in line with expectations.

Money markets are now betting the RBA will likely raise rates unchanged at its November policy meeting. The probability of a rate hike fell to around 20%, data from LSEG showed.

On Japan’s front, Chief Cabinet Secretary Minoru Kihara said on Monday that there are no plans for a fresh release of crude oil from national reserves as the country had already released crude supplies, despite a G7 agreement to release 100 million barrels of diesel and crude from emergency reserves.

"Underlying inflation is near the BOJ's 2% target, and wages are becoming embedded at levels consistent with 2% inflation. If so, it would be too risky to implement policies that boost demand," said former BoJ board member Asahi Noguchi

Japan focus turns to BoJ communication and wage momentum

Analysts at MUFG/BTMU highlight that, in Japan, "BOJ Governor Ueda’s speech and wage data will be important for assessing the timing of the BOJ’s next move." They expect "headline labour cash earnings growth is expected to slow to 3.7% from 4.3% as summer bonuses normalise," but emphasise that "underlying base-pay momentum is likely to remain firm, keeping the prospect of further monetary tightening alive." MUFG/BTMU add that "Governor Kazuo Ueda’s speech on 6 October will provide an additional policy signal, while household spending and current-account data are also due," underscoring the significance of the upcoming data and communication in shaping expectations for the BoJ’s policy path.

Technical Analysis: AUD/JPY retains a negative tone below the 100-day SMA

In the daily chart, AUD/JPY maintains a bearish near-term tone as price holds beneath the 20-day simple moving average (SMA) Bollinger middle band and the 100-day SMA. The pair also trades below the Bollinger upper band, underscoring a capped structure after the recent slide, while the Relative Strength Index (RSI) at 34.97 hovers just above oversold territory, hinting that downside momentum is still in control but somewhat stretched.

On the topside, initial resistance emerges at the Bollinger middle band at 110.65, with the upper band at 112.20 and the 100-day SMA at 112.56 forming a broader supply zone overhead. On the downside, the immediate cushion is the Bollinger lower band around 109.08, and a sustained break below this support would likely open the door to further weakness in the cross in the coming sessions.

(The technical analysis of this story was written with the help of an AI tool. Know more.)