AUD/JPY Price Forecast: Bullish signals persist above 100-day EMA
- AUD/JPY edges lower around 107.70 in Friday’s early European session.
- Japan’s Tokyo core inflation slowed more than expected in January.
- The constructive outlook for the cross remains intact above the 100-day EMA and bullish RSI momentum.
- The first upside barrier emerges at 108.35; the first support level to watch is 106.45.
The AUD/JPY cross drifts lower near 107.70 during the early European session on Friday. The expectations of coordinated US-Japan intervention could provide some support to the Japanese Yen (JPY) against the Australian Dollar (AUD). Japan’s Prime Minister Sanae Takaichi warned last week that officials stand ready to take necessary steps against speculative and highly abnormal market moves.
On the other hand, the upside for the JPY might be limited as softer-than-expected Japan’s Tokyo Consumer Price Index (CPI) trims near-term Bank of Japan (BoJ) hike expectations. Data released by the Statistics Bureau of Japan on Friday revealed that the headline Tokyo CPI rose 1.5% YoY in January, the slowest pace since March 2022, compared to 2.0% in the previous month.
Meanwhile, Tokyo Core CPI inflation eased to 2.0% year-on-year in January, the slowest pace since October 2024, down from a 2.3% increase in December and below market expectations of 2.2%. This report reinforces expectations that the Japanese central bank will remain cautious on further rate hikes.
Technical Analysis:
In the daily chart, AUD/JPY holds well above the rising 20-day SMA and the 100-day EMA, underscoring an entrenched bullish trend. Both averages slope higher, confirming upward bias and providing dynamic support. RSI at 63.64 remains in positive territory after easing from prior overbought readings, signaling vigorous yet moderated momentum. Immediate resistance emerges at the upper Bollinger Band at 108.35, while first support aligns with the middle band at 106.45. A daily close above resistance could extend gains, whereas a pause there would favor a pullback toward the mid-band.
Price hovers near the upper Bollinger Band, indicating persistent bullish pressure and stretched conditions. The bands have widened in recent sessions, flagging rising volatility and momentum. The 20-day SMA continues to ascend, keeping a supportive tone on pullbacks, while the 100-day EMA far below anchors the broader uptrend.
(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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