AUD/JPY Price Forecast: Slips towards 110.50 as mildly bearish outlook persists

• Near 110.60, AUD/JPY comes under modest selling pressure in early European trading on Thursday.
• Although the cross retains a bearish bias, neutral RSI momentum leaves room for further consolidation.
• Resistance initially stands at 111.15, while 110.20 marks the first support level to monitor.

At around 110.60, AUD/JPY is lower in Thursday’s early European session, with hawkish comments from Japanese authorities lending some support to the Japanese Yen (JPY) against the Australian Dollar (AUD).

Underlying inflation is progressing firmly towards the Bank of Japan’s (BoJ) 2% target, Deputy Governor Ryozo Himino said on Wednesday. His remarks followed Governor Kazuo Ueda’s statement on Monday that underlying inflation was close to the 2% objective. Ueda also said that an increase in the bank’s short-term policy rate would likely bring a steady rise in long-term interest rates alongside policy.

The probability of an interest rate rise at the November policy meeting increased to 45% from 30% before comments by Reserve Bank of Australia (RBA) monetary policy board member Andrew Hauser, according to the Guardian. Speaking on Wednesday, Hauser said the inflation outlook was materially worse than the bank had projected.

Japan’s exports sustain growth despite missing forecasts

September’s early figures indicated another solid showing for Japan’s external sector, according to analysts at Deutsche Bank. Exports increased by “+16.7% in September compared to the same month last year,” underpinned by “robust demand for semiconductors and AI-related products that continued to support growth.” Although the result missed the “expectation of a +21.3% increase,” the analysts note that it “marked the 13th consecutive month of gains following a 9.3% rise in August,”. Turning to imports, Deutsche Bank observes that “imports rose by +18.9% y/y, falling short of the forecast of a +20.4% increase,”. The bank adds that this weaker outcome helped reduce the external shortfall, with “a decrease in imports” helping bring Japan’s trade deficit “to -536.6 billion yen in September from -1.11 trillion yen in the previous month.”

Technical outlook: AUD/JPY retains a slight bearish bias beneath the 100-day SMA

Below the longer-term 100-day simple moving average (SMA), AUD/JPY retains a slightly bearish daily-chart outlook. However, the cross remains above the 20-day Bollinger SMA, pointing to a recovery constrained by the broader corrective backdrop. With the Relative Strength Index (RSI) near 50, momentum appears neutral. This favours consolidation over a clear bullish reversal while resistance overhead remains unbroken.

The upper Bollinger band, around 111.15, provides the first resistance, ahead of a firmer hurdle at the 100-day SMA near 112.10. If the cross breaks decisively above that level, it could advance towards the 16 June high of 113.55, followed by the 27 July high of 114.67. 

Support lies initially at the 20-day Bollinger midline around 110.20, with the psychological 110.00 mark next in line. Below that, attention turns to the lower Bollinger band near 109.20. A breach of this level would leave the cross exposed to deeper losses.

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