110.50 gives way: AUD/JPY Price Forecast stays bearish below 100-day SMA

• 110.35 is the level AUD/JPY approaches as it eases in early Asian trading on Monday.
• Below the 100-day SMA, the cross remains under pressure as RSI momentum stays bearish.
• 110.15 marks the first downside target, while 111.10 provides immediate resistance.

110.35 is where AUD/JPY trades in negative territory early in Monday’s European session. Supporting the Japanese Yen (JPY) against the Australian Dollar (AUD), hawkish rhetoric may bolster expectations of an interest rate rise by the Bank of Japan (BoJ) this year.

A quarter-point increase at December’s meeting is the majority expectation among economists surveyed by Reuters, following an unchanged rate decision at the October policy meeting on Friday.

Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said: "It's a historical moment for the BOJ, though it faces a more ‌challenging task now that it needs to step not just on the accelerator but the brakes," Naomi added: "The BOJ will probably scrutinise upcoming data and market moves in deciding whether to raise rates in December, or hold until January,”

For the Australian Dollar, Monday brought a signal from Reserve Bank of Australia (RBA) Chief Economist Sarah Hunter that further interest rate increases may be necessary. Hunter warned that inflation is still too high, with recent overseas price pressures at risk of becoming embedded in Australia.

Gradual BoJ tightening limits Yen support

Recent Yen support does not mean the Bank of Japan is likely to speed up its tightening cycle, Brown Brothers Harriman strategists caution. They point to “headline and core CPI inflation tracking below its 2026 projection of 2.5%.” Market pricing is also restrained: the strategists note that “the swaps curve price in just 2% odds of a 25bps BoJ rate hike to 1.50% on October 30, and 80% probability of a hike on December 18,” signalling expectations of gradual, data-dependent normalisation, not a sudden policy shift.

AI inflation risks: BoJ’s Himino keeps Yen bulls watchful

8.2/10 is BoJ’s Himino’s score on FXS Speechtracker, in line with the historical average and consistent with a firm policy message. Strong AI-related capital expenditure and exports, higher medium- and long-term inflation expectations, and underlying inflation approaching the 2% target feature prominently. Together, these themes indicate a distinctly hawkish tilt compared with the traditional ultra-accommodative stance.

Expectations of gradual normalisation are reinforced by warnings that delaying policy adjustments could increase upside inflation risks and harm the economy. Financial conditions remain accommodative and real interest rates low. The speech gives the Yen a supportive bias towards future tightening. Dollar/Yen could face downside risks if sustained inflation and robust bank lending prompt markets to price in BoJ action sooner.

Technical Outlook: 100-day SMA caps AUD/JPY as bearish bias persists

On the daily chart, trading below both the 100-day simple moving average (SMA) and the upper Bollinger band keeps AUD/JPY’s near-term outlook bearish. An attempt to find stability above support at the middle Bollinger band is under way. At 47.01, the Relative Strength Index (RSI) remains slightly under the neutral 50 threshold, suggesting limited recovery momentum rather than a clear turn bullish.

The middle Bollinger band provides the nearest support at 110.15. Below it, the lower Bollinger band around 109.21 offers a weaker structural floor. If that level gives way, the 15 October low of 108.64 could come into view. 

For a recovery, the first obstacle is the upper Bollinger band near 111.10, followed by the 100-day SMA at 112.05. Beyond those levels, the 18 August high of 113.61 represents the next resistance. 

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