Key Moments
- AUD/JPY trades lower around 112.25 in early European hours, remaining in negative territory.
- Renewed pressure on Japanese pension funds to boost domestic allocations supports JPY against AUD.
- Pair holds a mildly bearish technical tone below the 20-day Bollinger middle band, with the broader uptrend still referenced by the 100-day SMA near 112.59.
Yen Supported by Shift Toward Domestic Assets
The AUD/JPY cross is under pressure around 112.25 during early European trading on Monday, with the Japanese Yen (JPY) firming against the Australian Dollar (AUD). The move reflects a renewed effort by Japanese authorities to encourage the country’s large public pension funds to increase allocations to domestic markets.
“The pension funds are pretty large in size (and) currently, 50 per cent is allocated to foreign investments in their strategic allocation, (so) a shift in that would definitely create a lot more inflows for domestic assets,” said Fabien Yip, a market analyst at IG. “That’s supportive of the currency and at the same time, also supportive of equities and bonds,” Yip added.
Technical Picture: Mild Bearish Bias Within Broader Uptrend
On the daily chart, AUD/JPY continues to show a mildly bearish setup as price trades below the middle line of the 20-day Bollinger Bands and holds just above the lower portion of its recent trading range. The 20-day Bollinger envelope is currently restraining upside attempts, while the 100-day simple moving average (SMA) near 112.59 remains a key reference point for the prevailing broader uptrend. This configuration indicates that the latest pullback is unfolding within a still-intact longer-term positive structure.
The Relative Strength Index (14) has eased to approximately 47, signaling waning upside momentum, but without yet pointing to oversold conditions.
Key Technical Levels
Immediate resistance on the upside is located around the Bollinger middle band near 112.35. If buyers regain traction above this zone, further resistance is anticipated at the upper Bollinger band, which comes in around 113.52.
On the downside, a break under the recent Bollinger band floor near 111.15 would increase the risk of a deeper corrective move. Even in that case, the broader trend backdrop remains guided by the longer-term 100-day SMA, which is viewed as an important demand region on pullbacks.
| Indicator / Level | Value / Zone | Implication |
|---|---|---|
| Spot price (early European hours) | Around 112.25 | Trades in negative territory |
| 20-day Bollinger middle band | Near 112.35 | Initial resistance level |
| Upper Bollinger band | Around 113.52 | Next topside barrier |
| Lower Bollinger band floor | Near 111.15 | Break below exposes deeper correction risk |
| 100-day SMA | Around 112.59 | Key longer-term trend reference and demand area |
| RSI (14) | About 47 | Indicates fading momentum, not oversold |
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