Key Moments
- AUD/JPY trades near 114.05, maintaining a constructive tone above the 100-day exponential moving average.
- Daily RSI sits at 68.62, signaling strong bullish momentum approaching overbought territory.
- Key resistance is identified at 115.35, while initial support is located around 111.90.
Session Overview
AUD/JPY continues to edge higher, trading around 114.05 during Wednesday’s Asian and early European dealings. The cross remains supported as the Australian Dollar (AUD) advances against the Japanese Yen (JPY), helped by a hawkish tone from the Reserve Bank of Australia (RBA). The pair holds a firm bullish stance while it trades above the 100-day exponential moving average (EMA) and benefits from positive momentum signals.
Geopolitical Backdrop and Safe-Haven Dynamics
US President Donald Trump said on Tuesday that he is extending the ceasefire with Iran at Pakistan’s request while waiting for a “unified proposal” from Tehran, even as the US military continues to enforce a blockade of Iranian ports. Market participants are expected to closely follow developments around US-Iran peace negotiations. Any indications of prolonged conflict between the two countries or broader regional tensions in the Middle East could lift demand for safe-haven assets such as the JPY and potentially weigh on the AUD/JPY cross.
Technical Picture: Trend Remains Constructive
On the daily chart, AUD/JPY preserves a clearly bullish configuration. Spot prices are trading comfortably above both the 20-day simple moving average derived from the Bollinger Bands and the 100-day EMA, underscoring that the broader uptrend is still in place. The pair is advancing toward the upper Bollinger Band, while the Relative Strength Index (RSI) at 68.62 stands just shy of overbought territory, indicating robust yet increasingly stretched upside momentum.
| Technical Level | Indicator / Description | Level |
|---|---|---|
| Spot price | Current trading level | 114.05 |
| Immediate resistance | Upper Bollinger Band | 115.35 |
| Initial support | Middle Bollinger Band | 111.90 |
| Secondary support zone | 100-day EMA | 108.55 |
| Additional support | Lower Bollinger Band | 108.45 |
| Momentum indicator | Relative Strength Index (RSI) | 68.62 |
On the upside, the first notable resistance is aligned with the upper Bollinger Band at 115.35, a region where some participants may look to lock in gains if buying pressure begins to moderate. On the downside, the middle Bollinger Band near 111.90 offers initial support. A more pronounced retracement would bring a demand area into view around the 100-day EMA at 108.55 and the lower Bollinger Band at 108.45. This confluence is expected to provide a solid medium-term base as long as the prevailing bullish pattern remains intact.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen: Key Drivers in Focus
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its performance is broadly influenced by the state of the Japanese economy, but more specifically by the Bank of Japan’s (BoJ) policy stance, the spread between Japanese and US bond yields, and overall risk sentiment among traders, among other factors.
Bank of Japan Policy and Currency Impact
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.
Yield Differentials and Risk Sentiment
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 viewed as a safe-haven asset. In periods of market stress, investors tend to shift funds into the JPY due to its perceived stability and reliability. As a result, episodes of turbulence are typically associated with Yen strength against currencies considered to be riskier, a dynamic that remains a key consideration for AUD/JPY traders.
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