AUD/JPY Price Forecast: Bearish bias holds below 100-day SMA as pair slips under 110.50

• Selling pressure takes AUD/JPY towards 110.35 during early Asian trading on Monday.
• Below the 100-day SMA, the cross remains under pressure as RSI momentum stays bearish.
• On the downside, 110.15 is the first target in focus, while 111.10 provides immediate resistance.

Pressure on AUD/JPY leaves the cross trading around 110.35 in Monday’s early European session. The Japanese Yen (JPY) gains against the Australian Dollar (AUD), with hawkish commentary potentially strengthening expectations of an interest rate increase by the Bank of Japan (BoJ) this year.

A hold at Friday’s October policy meeting remains the expectation of most economists surveyed by Reuters. They anticipate a quarter-point increase at the subsequent meeting in December.

Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, described the challenge: "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’s comments from Reserve Bank of Australia (RBA) Chief Economist Sarah Hunter pointed to the possibility of another interest rate increase. Hunter cautioned that inflation is still too high and that recent price pressures originating overseas risk becoming embedded in Australia.

Could gradual BoJ tightening limit support for the Yen?

Recent support for the Yen is unlikely to prompt a faster Bank of Japan tightening cycle, according to strategists at Brown Brothers Harriman, who point to “headline and core CPI inflation tracking below its 2026 projection of 2.5%.” Market expectations also remain restrained, they note: “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,” reinforcing the view that policy normalisation will be gradual and data-dependent, rather than abrupt.

Do Himino’s AI-related inflation warnings give Yen bulls reason to stay alert?

A score of 8.2/10 on FXS Speechtracker puts BoJ’s Himino in line with the historic average, indicating a consistently firm policy stance. Compared with the traditional ultra-accommodative approach, his focus on robust AI-related capital expenditure and exports, higher medium- and long-term inflation expectations, and underlying inflation approaching the 2% target conveys a distinctly hawkish tilt.

Expectations of gradual normalisation are reinforced by warnings that delaying policy adjustments could increase upside inflation risks and harm the economy, while financial conditions remain accommodative and real rates low. The speech lends support to expectations of further tightening, favouring the Yen. Dollar/Yen could therefore face downside risks if sustained inflation and strong bank lending lead markets to bring forward their repricing of BoJ policy.

Technical Outlook: Can AUD/JPY shake off its bearish bias below the 100-day SMA?

A near-term bearish outlook persists on the AUD/JPY daily chart, with the cross trading below both the 100-day simple moving average (SMA) and the upper Bollinger band. Efforts to stabilise above support at the Bollinger middle band have yet to signal a decisive bullish turn. At 47.01, the Relative Strength Index (RSI) remains slightly below the neutral 50 threshold, indicating limited recovery momentum.

The Bollinger middle band at 110.15 offers the nearest downside support, followed by a weaker structural floor around 109.21 at the lower Bollinger band. Should that level give way, the October 15 low of 108.64 could come into view. 

Any advance would first encounter resistance near 111.10 at the upper Bollinger band, before reaching the 100-day SMA at 112.05. Beyond that, the August 18 high of 113.61 represents the next barrier. 

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