AUD/JPY Price Forecast: Falls further below 109.00 as bearish bias holds beneath 100-day SMA

• Early European trading on Friday sees AUD/JPY fall sharply towards 108.90.
• Below the 100-day SMA, the cross retains a bearish bias as the RSI signals negative momentum.
• Resistance initially stands at 109.15, while 108.64 provides the first support level.

Bank of Japan (BoJ) rate rise signals and demand for safe havens lift the Japanese Yen (JPY) against the Australian Dollar (AUD). Against that backdrop, AUD/JPY trades lower at around 108.90 in Friday’s early European session.

Global financial markets have been unsettled this week by concerns over closer scrutiny of the Artificial Intelligence (AI) industry, particularly data centre construction. As investors seek safety, the JPY gains support and the cross comes under pressure.

Underlying inflation was approaching the central bank’s 2% target, prompting most BoJ policymakers to agree that further interest rate rises would be appropriate, according to the September meeting minutes published on Thursday. The hawkish minutes could lend further support to the JPY.

As the central bank weighed developments in the Middle East, rising demand associated with Artificial Intelligence (AI) and Foreign Exchange (FX) movements, one board member suggested there might be scope to raise interest rates more quickly.

BoJ minutes support further gradual policy tightening

Turning to central bank developments, Deutsche Bank analysts say the BoJ’s September meeting minutes "reinforced the case for further policy tightening." Policymakers "generally agreed that interest rates should continue to rise," the analysts note, with one member "highlighting the possibility of a faster pace of hikes." Deutsche Bank also draws attention to another policymaker who "noted that while there was no need for immediate action, the BoJ should continue to calibrate policy carefully to prevent excessive and persistent inflationary pressures," reflecting a committee that remains cautious but clearly inclined towards tighter policy.

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

With spot prices firmly constrained below both the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-day SMA component, the daily AUD/JPY chart continues to signal a bearish near-term outlook. The cross is testing the bottom of its recent range, while the lower Bollinger band presents an immediate barrier overhead. Meanwhile, the Relative Strength Index (RSI) stands at 36.91, just above oversold territory, suggesting continued selling pressure rather than an imminent bullish reversal.

Any recovery would first encounter resistance at 109.15, the lower Bollinger band, before reaching the psychological 110.00 mark and the 20-day SMA around 110.40, where selling interest could intensify. A sustained move above that level could open the way towards the upper Bollinger band at 111.65, followed by the 100-day SMA at 111.80. 

Initial support lies at 108.64, the low recorded on 15 October. Should the cross break below it, the low of 107.70 from 13 February would come back into view, ahead of the 26 January low at 106.08. 

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