AUD/JPY Price Forecast: Falls to around 110.00 as bearish bias persists below 100-day SMA

• AUD/JPY eases towards 110.10 as Friday’s European session gets under way.
• With Japan’s CPI inflation above the BoJ’s 2% target for the first time this year, the argument for a near-term rate rise has strengthened.
• Below the 100-day SMA, the cross retains a bearish bias.
• Initial downside attention centres on 109.20, while resistance lies immediately ahead in the 111.00-111.10 region.

Japan’s National Consumer Price Index (CPI) inflation has moved above the Bank of Japan’s (BoJ) target for the first time in nine months, reinforcing the case for a widely anticipated interest rate increase in December. The Japanese Yen (JPY) consequently edges up against the Australian Dollar (AUD), leaving AUD/JPY lower at around 110.10 in early European trading on Friday.

Figures released by the Statistics Bureau of Japan on Friday showed annual National CPI inflation at 2.1% in September, up from 1.9% in August. Core CPI, which excludes volatile fresh food prices but retains fuel costs, also rose 2.1% YoY in September after a 1.8% increase in August, matching the consensus forecast.

Excluding both fresh food and energy, CPI increased 2.4% year on year in September, following a 2.0% rise in August. The BOJ monitors this measure closely as a better indicator of demand-driven price pressures.

A Reuters poll showed that most economists anticipate unchanged rates next week and a quarter-point increase at the subsequent meeting in December.

BoJ expected to hold at 1.25% while hawkish stance sustains debate over next rise

For the 29-30 October meeting, Standard Chartered analysts expect the BoJ to “keep the policy rate unchanged at 1.25% at its 29-30 October meeting, following September’s 25bps hike,” while emphasising that its stance will be far from neutral. Their assessment is that “we expect policy makers to maintain a clearly hawkish tone,” as “the debate is increasingly shifting from whether the BoJ will hike again to when the next hike will occur.” On timing, they say that “while December is now a live meeting, January 2027 remains our base case for the next hike.” Standard Chartered also contends that “the BoJ has an incentive to continue policy normalisation to support yield differentials and reduce the risk of renewed JPY weakness, particularly if the Fed resumes tightening or maintains a restrictive policy stance for longer than expected.”

Yen outlook turns more hawkish as BoJ’s Himino highlights AI-led capex and inflation risks

An FXS Speechtracker score of 8.2/10 puts BoJ’s Himino exactly at the historical average. Even so, the tone is distinctly more hawkish, with underlying inflation approaching the 2% target and expectations continuing to rise. Robust AI-related demand is boosting capital expenditure and exports, while real rates remain low and bank lending expands rapidly. Together, these factors underline how increasingly difficult it is to reconcile accommodative conditions with the upside price risks identified in the speech.

By warning that delayed policy adjustments could generate inflation risks and harm the economy, Himino strengthens the bias towards earlier normalisation, a supportive factor for the Yen over the medium term. The argument that price stability secured through appropriate monetary policy would improve Japan’s sustainable growth points to BoJ tolerance for tighter policy ahead, although near-term decisions remain dependent on the data.

Technical Outlook: AUD/JPY retains bearish bias beneath the 100-day SMA

Trading beneath the middle Bollinger band and comfortably below the 100-day simple moving average (SMA), AUD/JPY retains a bearish near-term bias on the daily chart. Additional overhead supply at the upper Bollinger band suggests that rebounds are likely to stall before testing the medium-term trend line represented by the 100-day SMA. At 45.43, the Relative Strength Index (14) is marginally below neutral, signalling muted bullish momentum. This supports the view that the bounce is corrective within a broader downward phase, rather than a reversal of the trend.

The lower Bollinger band provides the first support around 109.20, ahead of the 15 October low at 108.64. Should that floor give way decisively, a more pronounced decline towards the 13 February low of 107.69 would become possible.

Resistance is initially found in the 111.00-111.10 area, where the psychological level and upper Bollinger band lie. Closing above the latter on a daily basis could clear a path towards the 100-day SMA at 112.05. Beyond that, attention would turn to the 16 June high of 113.55, followed by the 27 July high of 114.67. 

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