Key Moments
- AUD/JPY trades near 112.20 in early European dealings on Friday, supported by buying interest.
- The cross holds above its rising 100-day EMA near 106.60, with RSI at 57.00 signaling constructive but less stretched momentum.
- Key levels include support at 111.58 and resistance at 113.65, with 114.00 as a further upside focus.
Australian Dollar Gains as RBA Delivers Back-to-Back Hikes
The AUD/JPY pair is trading around 112.20 during the early European session on Friday, as demand for the Australian Dollar strengthens against the Japanese Yen (JPY). The move follows a hawkish stance from the Reserve Bank of Australia (RBA), which has reinforced bullish momentum in the cross.
The RBA lifted its Official Cash Rate (OCR) by 25 basis points to 4.10% at its March meeting on Tuesday. This decision represents the second consecutive rate increase of the year, after a 25 basis point hike in February.
During the post-meeting press conference, RBA Governor Michele Bullock stated that prices remained too high and that the board was concerned about potential second-round effects from increased energy costs linked to the Middle East conflict.
Geopolitical Risk Supports Safe-Haven Appeal of Yen
On the risk side, geopolitical tensions are providing a potential counterweight to AUD strength. Intensifying conflict in the US-Israeli war with Iran could prompt investors to seek safety in the JPY, traditionally viewed as a haven currency.
The US-Israeli war with Iran has entered its third week with no indication of de-escalation. According to Bloomberg, Iranian Foreign Minister Abbas Araghchi vowed to show “ZERO restraint” if the country’s energy infrastructure were hit again.
Technical Picture: Uptrend Intact Above 100-Day EMA
From a technical perspective, the daily chart points to a constructive outlook for AUD/JPY. The cross is extending its move higher well above the rising 100-day exponential moving average, which is positioned near 106.60. This configuration signals a firmly entrenched uptrend.
Recent daily candles are clustered in the upper portion of the Bollinger Band envelope, with the middle band around 111.58 functioning as a dynamic pivot. Price action in this zone indicates persistent upside pressure without suggesting extreme overextension.
The Relative Strength Index (RSI) stands at 57.00, having cooled from earlier overbought readings above 70. This moderation implies that bullish momentum remains in place, while appearing less stretched, which tends to favor continuation of the prevailing trend rather than a sharp reversal.
Key Technical Levels
Market participants are closely watching nearby support and resistance zones to gauge the next directional move.
| Level | Type | Description |
|---|---|---|
| 113.65 | Resistance | Recent upper Bollinger Band peak and initial topside barrier |
| 114.00 | Resistance | Next upside objective if buyers extend control beyond 113.65 |
| 111.58 | Support | Bollinger middle band acting as a pivotal support area |
| 111.00 | Support | Psychological downside level exposed on a break below 111.58 |
| 109.52 | Support | Lower Bollinger Band region targeted on deeper pullbacks |
Immediate support is located at the middle Bollinger Band near 111.58. A sustained drop below this threshold would open the way toward the psychological 111.00 region, with further weakness pointing to the lower band support near 109.52.
On the upside, initial resistance is seen around the recent upper Bollinger Band high near 113.65, with the 114.00 area emerging as the next bullish target if buyers regain firm control. As long as daily closes remain above 111.58, the technical backdrop continues to favor buying on dips within the prevailing uptrend.
(The technical analysis of this story was written with the help of an AI tool.)
Background: Drivers of the Japanese Yen
The Japanese Yen (JPY) ranks among the most actively traded global currencies. Its value is shaped broadly by the performance of the Japanese economy and, more specifically, by policy decisions from the Bank of Japan (BoJ), yield differentials between Japanese and U.S. government bonds, and overall risk sentiment in financial markets, among other influences.
Currency management is one of the BoJ’s mandates, making its actions a key determinant for the Yen. The BoJ has at times directly intervened in foreign exchange markets, typically to weaken the Yen, though such measures are taken sparingly due to political sensitivities with major trading partners.
The BoJ’s ultra-loose monetary stance between 2013 and 2024 contributed to Yen depreciation versus major peers as policy diverged from other leading central banks. More recently, the gradual unwinding of that ultra-accommodative approach has provided some support to the currency.
Over the past decade, the BoJ’s commitment to very easy policy helped widen the yield gap between 10-year U.S. and Japanese bonds, underpinning the U.S. Dollar against the Yen. The BoJ’s decision in 2024 to progressively move away from its ultra-loose framework, combined with interest rate cuts by other major central banks, has started to narrow that differential.
The Yen is also widely regarded as a safe-haven asset. In periods of market turmoil or elevated uncertainty, investors often rotate into the Japanese currency, viewing it as relatively stable. Such episodes of stress typically strengthen the Yen against currencies considered more risky.
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