AUD/JPY Holds Near 110 as BoJ and RBA Paths Take Focus

Key Moments

Cross Steady as BoJ Tightening Expectations Build

The AUD/JPY pair is trading broadly flat near 110.10 during early European trading on Monday. The Japanese Yen (JPY) is firming against the Australian Dollar (AUD) as investors increasingly anticipate that the Bank of Japan (BoJ) will raise its policy interest rate to 1.25% on Thursday, which would mark the highest level in roughly 31 years.

With underlying inflation moving closer to the BoJ’s 2% objective, the central bank is expected to lift its policy rate at the September meeting in an effort to address upside risks to prices. The BoJ policy rate last stood at 1.25% in April 1995.

“A 25 bps hike is already almost fully priced,” said MUFG analysts. “For the yen to strengthen further, the BOJ will have to signal that they are planning to stick to the faster pace of hikes,” they added.

Market participants are set to scrutinize comments from BoJ Governor Kazuo Ueda at the upcoming press conference for indications on the projected trajectory of future rate increases and how far the central bank might be prepared to push rates in the current tightening phase.

RBA Rate Expectations Support the Aussie Side

On the Australian side, investors are now assigning nearly a 76% probability that the Reserve Bank of Australia (RBA) will increase the Official Cash Rate (OCR) to 4.60% at the next RBA Board meeting, according to RBA Rate Tracker.

Japan Pushes Back on U.S. Policy Influence

Analysts at Scotiabank note that policymakers at Japan’s Ministry of Finance have pushed back strongly against recent U.S. efforts to influence Japan’s macroeconomic policy direction. They highlight that Finance Minister Katayama even characterized Treasury Secretary Bessents’ statements as “a bit scary.” According to Scotiabank, this stance signals authorities’ strong commitment to maintaining policy independence despite rising external criticism.

Technical Picture: Bearish Bias Intact Below 100-Day Average

On the daily chart, AUD/JPY remains under pronounced downside pressure, with price trading well below both the 20-period Bollinger middle band and the 100-day moving average (MA). This configuration is keeping the broader trend constrained to the downside. The 14-period Relative Strength Index (RSI) has dropped to around 29, indicating entry into oversold territory and suggesting that while the bearish tone dominates, the intensity of selling could be stretched in the short term.

Key Levels to Watch

From a technical standpoint, the pair is operating below the 100-day SMA, sustaining a negative outlook for the cross. A short-lived rebound cannot be excluded given the oversold RSI reading, but the broader bias remains to the downside.

On the downside, initial support is located around the 20-period Bollinger lower band at 109.70, where downside momentum may stall or prompt some profit-taking. Below that level, further support appears at the August 3 low of 109.24, followed by the March 31 low at 108.79.

On the topside, the first resistance is seen at the August 10 low of 111.63, with the next barrier at the Bollinger middle band near 112.80. Above that, the 100-day MA at 113.00 represents a more significant hurdle. A clear move beyond 113.00 could open the door toward the Bollinger upper band region around 115.90.