Above 110.50: AUD/JPY price forecast points to strength, but BoJ hike bets limit gains below 100-day SMA

• 110.85 is within reach as AUD/JPY advances in early European trading on Wednesday.
• 1.50% is the expected December rate for the BoJ, according to a Reuters poll.
• Trading below the key 100-day SMA keeps the cross’s bias bearish.
• 111.00 marks the first resistance, while initial support stands at 110.20.

110.90 is the approximate level for AUD/JPY as it posts gains in Wednesday’s early European session. Hawkish remarks from Japanese authorities could, however, constrain further advances.

Underlying inflation has almost reached the central bank’s 2% target, Bank of Japan (BoJ) Deputy Governor Ryozo Himino said on Wednesday. Financial conditions remain accommodative, he added.

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

A December increase to 1.50%, after rises in June and September, is likely for the Japanese central bank, according to most economists surveyed by Reuters.

1.50% in December: BoJ inflation progress puts hike risk in focus

A more confident assessment from Bank of Japan Governor Ueda is highlighted by Danske Bank analysts. He now considers underlying inflation "quite close" to the 2% target, with tight labour markets and robust global AI demand driving price pressures. The bank also draws attention to Ueda’s warning that "failing to raise rates at an appropriate pace could push long-term bond yields higher," highlighting the danger of falling behind the inflation trend. For the BoJ’s next meeting, ending on 30 October 2026, Danske Bank says markets anticipate an unchanged rate of 1.25%. Attention will nevertheless centre on guidance that leaves "a hike to 1.5% as early as December on the table."

7/10 speech score: Ueda’s stronger inflation loop signals mild hawkishness

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

No fundamental change to the bond-tapering approach is envisaged, Ueda emphasises, while declining to announce emergency bond measures in advance. This points to a cautious stance guided by data. His message is that appropriately calibrated rate increases would permit long-term rates to rise “steadily” without ending accommodative financial conditions. That supports a controlled normalisation process and offers modest support for the Yen as markets price in a gradual retreat from ultra-easy policy.

Technical Analysis: 100-day SMA keeps AUD/JPY outlook bearish

Below the 100-day simple moving average (SMA), AUD/JPY retains a bearish near-term bias on the daily chart. Some short-term stabilisation is evident from its position above the Bollinger middle band, or 20-day SMA. Meanwhile, a Relative Strength Index (14) reading of 52.30 points to neutral to marginally positive momentum, rather than oversold conditions.

111.00, a psychological level, provides the first upside resistance before the upper Bollinger band near 111.25. Stronger selling pressure is likely around the more significant resistance at the 100-day SMA, near 112.10. 

110.20, at the Bollinger middle band, offers immediate downside support. A further bearish move would take the cross towards the 16 October low of 109.34. If sellers regain control, the lower Bollinger band around 109.15 would follow.

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