Key Moments
- AUD/JPY trades nearly flat around 100.05 in early European dealings on Thursday.
- Market odds for a Bank of Japan rate hike this month fall to nearly 12%, with probabilities around 90% when including December.
- The cross stays below its 100-day simple moving average, with resistance highlighted at 110.55 and support at 109.00.
Spot Market Overview
The AUD/JPY cross is little changed around 100.05 during early European trading on Thursday, with price action reflecting a period of consolidation. The tone in Japanese Yen (JPY) markets has been influenced by recent commentary from Bank of Japan (BoJ) officials that investors perceived as more cautious than anticipated, providing some support to the Australian Dollar (AUD) against the Yen.
BoJ Commentary Signals Gradual Normalization
On Tuesday, BoJ Governor Kazuo Ueda stated that the central bank would “assess the likelihood and risks of the baseline economic and price outlook being realized” when determining the pace and timing of further interest rate increases. This message was followed on Wednesday by BoJ board member Ayano Sato, who noted that she favored raising rates in multiple stages via a gradual approach.
Market participants currently expect the BoJ to proceed cautiously at its October monetary policy meeting. According to Bloomberg, traders are now pricing in nearly a 12% probability of a rate hike this month, down from as high as 40% early last week. When the December meeting is added to the horizon, that probability rises to around 90%.
RBA Expectations Tempered After CPI Data
On the Australian side, expectations for additional tightening by the Reserve Bank of Australia (RBA) in November have softened after the latest Consumer Price Index (CPI) data aligned with forecasts. Former RBA board member Ian Harper commented that another rate increase this year is “plausible,” but not necessarily the base case.
Analyst Views on BoJ Policy and JPY Carry Dynamics
Analysts at Rabobank note that, “despite announcing an as expected rate hike at its September policy meeting, the BoJ’s guidance was not as hawkish as the market had hoped for.” At the same time, they emphasize that “the BoJ’s policy of gradually raising interest rates is still eroding the JPY’s funding currency appeal,” indicating that the Yen’s traditional role in carry trades is being steadily weakened even as the central bank maintains a cautious tone.
Sato’s Speech: Gradualism, Independence, and Inflation Risks
BoJ board member Ayano Sato’s latest remarks reinforced this gradualist framework. Her speech score of 6.4/10 is described as matching her historic average, implying continuity rather than a notable shift in stance. The emphasis on gradual interest rate adjustments without a fixed trajectory suggests a form of cautious hawkishness, allowing the BoJ to remain flexible and data-dependent while avoiding abrupt market reactions.
Sato also underscored the importance of BoJ independence, even as monetary policy aligns with active fiscal measures, signaling that rate decisions are not being steered by government priorities. She highlighted that price risks lean slightly to the upside, citing higher oil prices linked to Middle East tensions. This introduces a mild upward bias to the inflation outlook, which supports the case for further measured tightening and offers a modestly constructive backdrop for the Yen, according to FXS Speechtracker.
Technical Outlook: AUD/JPY Bias Remains Negative Below 100-Day SMA
From a technical perspective, AUD/JPY maintains a bearish undertone on the daily chart as it continues to trade under the 100-day simple moving average (SMA) and below the middle line of the Bollinger Bands. Price action remains under the upper band, indicating that the latest bounce is constrained by layered resistance overhead. The Relative Strength Index (RSI) near 40 signals weak momentum but does not yet indicate oversold conditions.
| Technical Level | Indicator / Reference | Significance |
|---|---|---|
| 110.55 | Bollinger Bands middle band | First resistance on the topside |
| 111.33 | July 3 low | Next resistance above 110.55 |
| 112.10 | Upper Bollinger Band | Further resistance zone |
| 112.45 | 100-day SMA | Broader supply area if upside extends |
| 109.00 | Lower Bollinger Band | Nearest support level |
| 108.71 | October 1 low | Deeper support if 109.00 breaks |
| 107.69 | February 13 low | Next downside target on sustained weakness |
On the upside, the first technical barrier is located at the Bollinger Bands middle band at 110.55. A break above this area would expose the July 3 low at 111.33, followed by the upper Bollinger Band at 112.10. Sustained buying beyond these levels could open the path toward the 100-day SMA at 112.45, reinforcing a broader supply zone that may cap rallies.
On the downside, the lower Bollinger Band at 109.00 represents the closest support. A daily close below that threshold would likely clear the way for a deeper retracement toward the October 1 low at 108.71, followed by the February 13 low at 107.69.
The technical analysis of this story was prepared with the assistance of an AI tool, as disclosed by the original source.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
