AUD/JPY Price Forecast: Bearish signals strengthen downside bias as pair slips below 109.50

• Near 109.30, AUD/JPY edges lower in early European trading on Tuesday.
• Below the 100-day SMA, the cross maintains a bearish outlook, reinforced by negative RSI momentum.
• Initial downside focus falls on 108.85, while 110.00 marks the nearest resistance to monitor.

At around 109.30, AUD/JPY is trading lower in Tuesday’s early European session. Substantial official intervention is supporting the Japanese Yen (JPY), which is gaining against the Australian Dollar (AUD).

Quarterly data published on Monday by the Ministry of Finance (MOF) showed that Japan intervened in currency markets on three days between 30 July and 3 August. At 7.98 trillion JPY ($50.36 billion), the 30 July operation was the largest, surpassing the previous record of 6.28 trillion JPY established on 30 April.

Tsuyoshi Ueno, senior economist at NLI Research Institute, said: "The enormous scale of intervention underscored the government's sense of urgency to stem the yen's decline,"

Further support for the JPY could come from expectations of additional Bank of Japan (BoJ) rate increases. Released on Tuesday, the summary of the 29–30 October meeting showed that many board members consider a near-term interest rate rise necessary, suggesting a good chance of action in December.

Yen finds support from BoJ tightening expectations and JGB market dynamics

Among this year’s standout currencies, Rabobank analysts single out the JPY, observing that “the JPY is the second best performing G10 currency in the half year to date.” Although they recognise that this “strong ranking has been obtained with the support of sizeable FX intervention over 3 days during the summer, which included joint support with the US Treasury,” they emphasise its recent resilience. Turning to a shorter timeframe, they note that “the JPY has managed to outperform the USD on a 1-month view with the market displaying a clear reluctance to push USD/JPY above the 158.70 area which coincides with the 200-day sma.”

While Rabobank notes that the “sell-off in the Nikkei 225 at the end of last week depressed market expectations regarding the chances of a December BoJ rate hike,” its analysts contend that “the strength of September wage data supports the potential for further policy tightening both next month and into next year.” For them, the backdrop “suggests USD/JPY can edge lower to the 155.00 area on a 3-month view.” They also identify that “another component of any JPY turnaround would likely be a more robust tone in the JGB market,” adding that this “could contribute to a more supportive backdrop for the JPY in the months ahead.”

Turning to domestic conditions, Rabobank observes that “Japan’s primary deficit is better than the G7 average and there is speculation that Japan’s huge asset managers may be tempted to repatriate to take advantage of higher JGB yields. This would have positive implications for the JPY.” As for forthcoming releases, the analysts highlight that “Q3 GDP data and October national CPI inflation, both due next week, will be of interest to BoJ watchers,” reiterating that they “remain cautiously optimistic on the medium-term outlook for the JPY.”

Technical Outlook: AUD/JPY remains under pressure beneath the 100-day SMA

With spot trading beneath both the 20-day and 100-day simple moving averages, the daily AUD/JPY chart continues to signal near-term weakness. Prices are retreating towards support at the lower Bollinger Band. Meanwhile, the Relative Strength Index (14), at approximately 41, remains below the neutral 50 threshold, suggesting that selling pressure still dominates despite the recent recovery from oversold territory.

Immediate support lies at 108.85, the lower Bollinger Band. A decisive break beneath that level would bring the 6 November low of 108.24 into view, ahead of the 13 February low at 107.70. 

For any recovery, the psychological 110.00 mark provides the first resistance, followed by the 20-day SMA at 110.30. Beyond that, the principal obstacle is the 110.70-110.75 area, where the upper Bollinger Band and 100-day SMA form a concentrated supply zone. A move back above this region would be needed to alleviate the prevailing bearish bias.

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