AUD/JPY Price Forecast: BoJ hike bets limit gains below 100-day SMA as pair firms above 110.50

• Near 110.85, AUD/JPY edges higher in early European trading on Wednesday.
• A December rate rise to 1.50% is expected from the BoJ, a Reuters poll indicates.
• Trading below the key 100-day SMA leaves the cross with a bearish bias.
• Resistance initially lies at 111.00, while 110.20 provides the first support.

At around 110.90, AUD/JPY is trading higher in Wednesday’s early European session. Further gains could, however, be constrained by hawkish remarks from Japanese authorities.

Underlying inflation has almost reached the central bank’s 2% target, Bank of Japan (BoJ) Deputy Governor Ryozo Himino said on Wednesday. Financial conditions nevertheless remain accommodative, he added.

In remarks earlier this week, BoJ Governor Kazuo Ueda said underlying inflation was approaching the 2% target. A rise in the bank’s short-term policy rate would likely be accompanied by a steady increase in long-term interest rates, he added. With substantial upside risks to inflation, board member Junko Koeda argued last week that the central bank should avoid excessive caution over raising rates, which are at their highest in 31 years.

Following increases in June and September, a December rise to 1.50% is likely from the Japanese central bank, according to most economists surveyed by Reuters.

BoJ highlights inflation progress as markets weigh a December rate rise

A tighter labour market and strong global AI demand are key sources of price pressure cited by Bank of Japan Governor Ueda, whose assessment that underlying inflation is "quite close" to the 2% target reflects greater confidence, according to Danske Bank analysts. The bank also draws attention to Ueda’s warning that "failing to raise rates at an appropriate pace could push long-term bond yields higher," highlighting the danger of falling behind the inflation trend. Markets anticipate an unchanged rate of 1.25% at the BoJ’s next meeting, which ends on 30 October 2026, Danske Bank notes. Attention will instead centre on guidance that leaves "a hike to 1.5% as early as December on the table."

Ueda signals a modest hawkish bias as the wages–prices cycle strengthens

Although FXS Speechtracker assigns the speech a score of 7/10, just below Ueda’s average of 7.4/10, his focus on “underlying inflation near 2%” and a positive wages–prices cycle conveys a mildly hawkish message. Robust global activity, domestic capital expenditure and exports are driving demand-led inflation, Ueda notes, alongside tight labour markets. His warning that poorly calibrated policy could lift long-term JGB yields further underlines the need to keep core inflation anchored near 2%.

A cautious, data-dependent approach is also evident in Ueda’s insistence that the fundamental strategy for tapering bond purchases remains unchanged and his refusal to announce emergency bond measures in advance. His view that well-calibrated rate increases would let long-term rates rise “steadily” without removing accommodative financial conditions points to a controlled normalisation process. As markets price in a gradual retreat from ultra-loose policy, that message offers modest support to the yen.

Technical Analysis: AUD/JPY Retains Bearish Bias Below the 100-day SMA

Remaining beneath the 100-day simple moving average (SMA) leaves AUD/JPY with a bearish near-term bias on the daily chart. Some short-term stabilisation is nevertheless suggested by the price holding above the middle Bollinger band, the 20-day SMA. Meanwhile, a Relative Strength Index (14) reading of 52.30 indicates neutral to mildly positive momentum, rather than oversold conditions.

The psychological 111.00 mark offers the first resistance, ahead of the upper Bollinger band near 111.25. Stronger selling pressure is likely around the more significant hurdle at 112.10, where the 100-day SMA sits. 

The middle Bollinger band at 110.20 provides immediate support. Should the decline deepen, the next level would be the 16 October low of 109.34, with the lower Bollinger band around 109.15 coming into view if sellers regain control.

(The technical analysis of this story was written with the help of an AI tool. Know more.)