AUD/JPY Drifts Lower as Firm Yen, Policy Cap Gains

Key Moments

Cross Slides in Early European Trade

AUD/JPY comes under pressure around 110.60 in early European dealings on Thursday, with the cross trading in negative territory. The pair retains a mildly bearish tilt, although the neutral stance of the Relative Strength Index (RSI) suggests that a period of consolidation cannot be excluded. On the upside, the first resistance is identified at 111.15, while initial support is noted at 110.20.

The Japanese Yen (JPY) draws some backing from recent commentary by Japanese policymakers, tempering Australian Dollar (AUD) strength and weighing on the cross.

Policy Signals from BoJ and RBA

Bank of Japan (BoJ) Deputy Governor Ryozo Himino said on Wednesday that underlying inflation is moving securely toward the central bank’s 2% target. Earlier on Monday, BoJ Governor Kazuo Ueda stated that underlying inflation is near the 2% target. He further stated that if the bank raises the short-term policy rate, long-term interest rates are likely to rise steadily with policy.

On the Australian side, Reserve Bank of Australia (RBA) monetary policy board member Andrew Hauser said on Wednesday that the inflation outlook is materially worse than the bank had forecast. Following these comments, the implied probability of a rate hike at the November policy meeting increased from 30% to 45%, according to the Guardian.

Japan Trade Data: Exports Extend Winning Streak

Analysts at Deutsche Bank note that early data for September showed a further solid performance from Japan’s external sector, with exports rising by “+16.7% in September compared to the same month last year,” supported by “robust demand for semiconductors and AI-related products that continued to support growth.” They highlight that this “marked the 13th consecutive month of gains following a 9.3% rise in August,” even though the latest print fell short of “expectation of a +21.3% increase.”

On the import side, Deutsche Bank points out that “imports rose by +18.9% y/y, falling short of the forecast of a +20.4% increase,” and that this softer outcome helped narrow the external shortfall, with “a decrease in imports” contributing to a reduction in Japan’s trade deficit “to -536.6 billion yen in September from -1.11 trillion yen in the previous month.”

Technical Outlook: Bias Remains Capped Below 100-Day SMA

On the daily chart, AUD/JPY maintains a modestly bearish profile, staying below the longer-term 100-day simple moving average (SMA) while trading above the 20-day Bollinger SMA. This configuration points to a constrained recovery within a broader corrective phase. The RSI is holding near the 50 level, signaling neutral momentum and backing the idea of sideways trade rather than a clear bullish shift, as long as overhead resistance levels limit further gains.

On the topside, the first resistance is located at the upper Bollinger band around 111.15, followed by a more robust ceiling at the 100-day SMA near 112.10. A sustained move above that region could open the way toward the June 16 high at 113.55 and subsequently the July 27 high at 114.67.

On the downside, initial support is seen at the 20-day Bollinger midline around 110.20, followed by the 110.00 psychological area. Below that, the next level of interest is the lower Bollinger band near 109.20, where a break would pave the way for a deeper decline.