Key Moments
- AUD/JPY trades around 112.35 in early European dealings, maintaining a short-term bearish tone below the 100-day SMA.
- Market focus remains on potential Japanese authorities’ intervention and upcoming comments from RBA Governor Michele Bullock on Friday.
- Key levels include resistance at 112.70 and 112.90, with downside support at 111.63, 110.77, and the 110.00 Bollinger lower band.
Cross Under Pressure as Yen Finds Support
AUD/JPY softens to roughly 112.35 during early trading in Europe on Thursday, with the pair holding in negative territory. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) as participants stay alert to the prospect of further official intervention in foreign exchange markets. Traders are also watching ahead to remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock, who is scheduled to speak on Friday.
Goldman Sachs Research strategist Karen Fishman noted that recent support for the Yen may be losing traction, stating that the intervention is “not a sustainable fix … ultimately just buys some time.”
BoJ Signals Concern on Inflation and Rate Trajectory
The Bank of Japan (BoJ) flagged rising risks of faster inflation in its summary of opinions from the July meeting. According to the summary, one policy board member indicated that the pace of interest rate increases could accelerate. As reported by Jiji, the BoJ may weigh another rate hike at its September policy meeting, following an increase in June, to address mounting concerns about higher inflation.
Unusual US-Japan FX Coordination Highlights Changing Yen Backdrop
DBS Group Research emphasized the exceptional nature of the latest efforts to support the Yen, observing that “co-ordinated FX intervention between the US and Japan is rare, with the last joint intervention occurring 15 years ago to weaken an excessively over-valued JPY in the aftermath of the 2011 Tohoku earthquake.” The research team pointed out that this past episode casts the current situation in a different light, with policymakers now using similarly rare measures in response to pronounced Yen weakness rather than strength.
Technical Picture: Short-Term Bias Softens, Uptrend Still Intact
On the daily chart, AUD/JPY leans toward a bearish short-term configuration as the cross trades back below the 20-period Bollinger Bands simple moving average and remains constrained by the 100-day simple moving average (SMA). Price action continues to hold well above the lower Bollinger band, indicating that the broader uptrend is still intact, even as upside momentum cools.
The latest 14-period Relative Strength Index (RSI) reading at 48.96 reflects a neutral-to-soft tone after the most recent advance stalled near the upper Bollinger band area.
| Level | Description | Price |
|---|---|---|
| Spot | Current trading level (early European session) | 112.35 (approx.) |
| Resistance 1 | Bollinger Bands 20-period SMA (middle line) | 112.70 |
| Resistance 2 | 100-day SMA | 112.90 |
| Upside Target | July 16 high | 113.88 |
| Upside Band | Upper Bollinger band | 115.45 |
| Support 1 | August 10 low | 111.63 |
| Support 2 | August 7 low | 110.77 |
| Support 3 | Bollinger lower band | 110.00 |
On the upside, immediate resistance aligns with the 20-period Bollinger Bands SMA around 112.70, followed by the 100-day SMA near 112.90. A sustained move above both levels would be required to refocus attention on the July 16 peak at 113.88, with scope toward the upper Bollinger band around 115.45.
On the downside, initial support is located at the August 10 low of 111.63. Below that, the August 7 trough at 110.77 comes into view, followed by the lower Bollinger band at 110.00. A firm break through this latter area would signal the potential for a deeper corrective phase within the prevailing broader trend.
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