AUD/JPY Price Forecast: BoJ hike bets limit gains below 100-day SMA despite strength above 110.50

• AUD/JPY advances towards 110.85 as Wednesday’s early European trading gets under way.
• A Reuters poll points to a BoJ rate increase to 1.50% in December.
• Trading below the key 100-day SMA leaves the cross with a bearish bias.
• Resistance starts at 111.00, while 110.20 marks the first support level.

AUD/JPY posts gains around 110.90 in Wednesday’s early European session, although hawkish remarks from Japanese authorities could constrain further upside in the cross.

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.

Earlier this week, BoJ Governor Kazuo Ueda also described underlying inflation as close to the 2% target. He added that an increase in the bank’s short-term policy rate would likely be accompanied by a steady rise in long-term interest rates. With rates at their highest in 31 years, board member Junko Koeda argued last week that significant upside inflation risks meant the central bank should avoid excessive caution over further increases.

Following increases in June and September, a December rate rise to 1.50% is likely, according to most economists surveyed by Reuters.

Does BoJ’s inflation progress leave a December rate hike in focus?

A more confident assessment from Bank of Japan Governor Ueda has drawn attention from Danske Bank analysts. Ueda now considers underlying inflation "quite close" to the 2% target, citing tight labour markets and robust global AI demand as major drivers of price pressure. According to Danske Bank, his warning that "failing to raise rates at an appropriate pace could push long-term bond yields higher," also highlights the danger of falling behind the inflation trend. For the next BoJ meeting, ending on 30 October 2026, Danske Bank says markets anticipate an unchanged rate of 1.25%. Attention will instead centre on guidance that leaves "a hike to 1.5% as early as December on the table."

Is a stronger inflation loop giving Ueda a mildly hawkish tilt?

A score of 7/10 from FXS Speechtracker places the speech slightly below Ueda’s average of 7.4/10. Even so, its focus on “underlying inflation near 2%” and a positive wages–prices loop gives it a modestly hawkish slant. Robust global activity, domestic capital expenditure and exports are fuelling demand-led inflation, Ueda says, alongside tight labour markets. His warning that poorly calibrated policy could lift long-term JGB yields further underlines the importance of anchoring core inflation near 2%.

A cautious, data-dependent approach is also evident in Ueda’s insistence that the fundamental bond-tapering strategy remains unchanged and his refusal to announce emergency bond measures in advance. He indicates that appropriately calibrated rate increases would let long-term rates rise “steadily” without removing accommodative financial conditions. This points to a controlled normalisation process, offering mild support to the Yen as markets factor in a gradual retreat from ultra-easy policy.

Technical Analysis: Can AUD/JPY Shake Off Its Bearish Bias Below the 100-Day SMA?

A near-term bearish bias persists on the AUD/JPY daily chart, with the cross still trading beneath its 100-day simple moving average (SMA). Some short-term stabilisation is nevertheless evident as the price holds above the Bollinger middle band, which is the 20-day SMA. Meanwhile, a Relative Strength Index (14) reading of 52.30 signals neutral to mildly positive momentum, rather than oversold conditions.

Any advance would first encounter the psychological resistance level of 111.00, ahead of the upper Bollinger band near 111.25. Further up, the 100-day SMA around 112.10 presents a more significant hurdle, with rallies likely to meet stronger selling pressure there. 

The Bollinger middle band at 110.20 provides immediate downside support. A further bearish move would take the cross towards the 16 October low of 109.34. Should sellers regain control, the lower Bollinger band around 109.15 would be the next level in focus.

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