AUD/JPY Price Forecast: Can gains above 110.50 hold as the outlook remains bearish below the 100-day SMA?

• Buying interest lifts AUD/JPY towards 110.75 as Tuesday’s European session gets under way.
• Despite improving RSI momentum leaving room for a brief recovery, the cross retains a bearish bias below the 100-day SMA.
• While 111.20 marks the nearest resistance to monitor, initial support stands at 110.20.

Gains in AUD/JPY bring the cross to around 110.75 in early European trade on Tuesday, with hawkish messaging from the Reserve Bank of Australia (RBA) lending some backing to the Australian Dollar (AUD) against the Japanese Yen (JPY). Attention will turn to Australia’s September inflation figures later on Wednesday, followed by the Bank of Japan (BoJ) interest rate decision on Friday.

Further rate increases look likely at the policy meeting early next month, after RBA Assistant Governor Sarah Hunter indicated that the central bank is “not quite yet” finished with its inflation fight. According to the ASX RBA Rate Tracker, markets now assign nearly a 62% probability to a rate rise to 4.85% at the next RBA Board meeting.

For their next catalyst, traders are looking to Australia’s Consumer Price Index (CPI) release. A 4.2% annual increase is expected by economists for September, alongside a projected monthly rise of 0.7%. Evidence of stronger inflation in Australia could lend the Aussie a near-term lift.

At Friday’s October policy meeting, the BoJ is expected to leave its interest rate unchanged at 1.25%. Analysts said it would probably refrain from offering clear signals on when, or how quickly, subsequent rate increases might come. The Japanese central bank must balance preventing an inflation overshoot against the risk of unsettling nervous markets with a premature hike.

Can December rate-hike pricing and the BoJ outlook support the Yen?

Brown Brothers Harriman analysts describe the BoJ as “widely expected to keep rates on hold at 1.25% and assess September’s 25bps hike before tightening again.” They draw attention to the caution expressed by Governor Kazuo Ueda in September: he warned that “rapid rate hikes could unsettle asset prices,” while emphasising that “it could take some time to confirm that 2% inflation is entrenched.”

Nevertheless, in BBH’s view, “firmer underlying inflation leaves scope for a more hawkish Outlook Report, lifting BoJ rate expectations in favor of JPY.” To illustrate the change in market pricing, the analysts note that “the swaps curve price in 75% odds of a 25bps BoJ rate hike to 1.50% at the December 18 meeting and nearly 75bps of tightening in the next twelve months.”

Could AI-led inflation risks flagged by BoJ’s Himino sustain Yen support?

A hawkish tilt emerges from BoJ’s Himino’s emphasis on higher underlying inflation and inflation expectations, even though his FXS Speechtracker score of 8.2/10 matches the historical average exactly. Robust AI-related demand is boosting capital expenditure and exports. Together with accommodative financial conditions, low real interest rates and rapid bank lending, this strengthens the argument that inflation is moving towards the 2% target, favouring a firmer Yen.

An increasing willingness to adjust policy is evident in warnings that delaying changes could amplify upside inflation risks and harm the economy, although the timing still depends on incoming data. The emphasis on securing sustainable growth by delivering stable prices through “suitable monetary policy” points to a gradual shift away from the BoJ’s ultra-easy stance. That backdrop should constrain Yen losses and leave markets watchful for further policy normalisation.

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

Trading beneath the 100-day simple moving average (SMA) continues to restrain AUD/JPY on the daily chart. A recovery above the Bollinger Bands’ 20-period middle band points to some short-term stabilisation. Meanwhile, the Relative Strength Index (14), at 52.25, suggests a modest improvement in momentum, though this has not yet tested the broader bearish structure established by the dominant SMA overhead.

Should the cross retreat, the Bollinger middle band around 110.20 offers the first support, ahead of the psychological 110.00 mark. Further down, the lower Bollinger band near 109.20 provides another cushion, where sellers may pause if the decline resumes.

Any advance would first encounter resistance at the upper Bollinger band near 111.20, before reaching the 100-day SMA at 112.00. A sustained move above the latter level could open the way for a rally towards the 18 August high of 113.61.

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