AUD/JPY Holds Near 111.00 as Traders Weigh RBA Hike and Japan Intervention Risk

Key Moments

Fundamental Drivers: RBA Expectations vs. Japan Intervention Risk

The AUD/JPY cross is trading in positive territory near 110.90 in early European hours on Monday, having held similar levels during the early Asian session. Support for the Australian Dollar (AUD) against the Japanese Yen (JPY) is being underpinned by rising expectations that the Reserve Bank of Australia (RBA) will deliver another interest rate increase at its upcoming policy meeting on Tuesday.

Market participants anticipate that the RBA will raise the Official Cash Rate (OCR) for the fifth time this year. According to the article, almost all economists surveyed by Bloomberg expect the nine-member board to implement a 25 basis points hike, which would take the OCR to 4.85%, described as the highest level in 18 years.

At the same time, traders are closely watching for any potential currency intervention by Japanese authorities, a factor that could bolster the JPY and limit further upside in AUD/JPY. Japan’s Finance Minister Satsuki Katayama said on Monday that the joint FX statement with the US remains in place and that the government will act against disorderly moves. Katayama also stated that it is crucial to maintain stable foreign exchange markets and that the government needs to avoid chaotic fluctuations.

TD Securities View: Hike Now, Extended Hold Later

TD Securities expects the RBA to raise rates and then move into a prolonged holding phase. The firm highlights that:

According to TD Securities, “the risks to inflation are tilted to the upside in Q4,” a backdrop they believe is “likely to encourage markets to price in some chance of a follow-up hike in Q1 of 2027.” After next week’s anticipated move, the bank expects the RBA to pause, noting that “after next week’s anticipated hike, we forecast the Bank moving to the sidelines to assess the impact of the series of rate hikes to date.” TD Securities argues that “the lags in policy and signs of slowing economic activity should keep the Bank on hold in 2027 with cuts to commence in 2028.” Strategists add that “the Monetary policy bias table below is not too different from what we presented ahead of the September RBA meeting,” and that “this time we expect” the RBA’s hawkish rhetoric to be reinforced by persistent upside inflation risks even as the policy stance shifts to a prolonged hold.

Technical Picture: Bearish Bias Persists Below the 100-Day SMA

On the daily chart, AUD/JPY continues to trade beneath its 100-day simple moving average (SMA), keeping the broader tone mildly bearish despite the latest rebound. Price action is confined within the Bollinger Bands, with the pair trading above the middle band but encountering supply near the upper band. The Relative Strength Index (RSI) sits around 52, indicating neutral to slightly improving momentum that has not yet been strong enough to overcome the dominant structural resistance.

Key Technical Levels for AUD/JPY

The immediate focus for traders centers on nearby resistance and support zones that are guiding short-term positioning.

On the upside, an initial ceiling is located around the upper Bollinger Band near 111.45, followed by the 100-day SMA at 111.95. A daily close above 111.95 would be required to decisively tilt the short-term bias back in favor of the bulls, opening a path toward the August 18 peak at 113.61.

On the downside, first support appears at the middle Bollinger Band, roughly at 110.50, before the 110.00 psychological area. Below that, the lower Bollinger Band around 109.50 forms the next key contention zone. A break beneath this lower band would signal scope for a more substantial continuation of the bearish trend.