AUD/JPY Price Forecast: Softens below 112.50, bias turns mildly bearish

The AUD/JPY cross trades in negative territory around 112.20 during the early European trading hours on Tuesday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) as traders are on for possible intervention from Japanese authorities.

Japan’s Finance Minister Satsuki Katayama said on Tuesday that the government was ready to take appropriate action against excessive currency moves. Additionally, Chief Cabinet Secretary Minoru Kihara stated that the government will work to build an economy less vulnerable to foreign-exchange volatility while remaining prepared to intervene in currency markets if necessary.

On the other hand, a hawkish tone from the Reserve Bank of Australia (RBA) might help limit the Aussie’s losses. According to the RBA Minutes from its June meeting, monetary policy needed to remain restrictive to remove excess demand in the economy. Markets were pricing only about 10 basis points (bps) of additional tightening by year-end, while pricing about 17 bps of easing by 2027, per Reuters.

Technical Analysis:

In the daily chart, AUD/JPY keeps a mildly bearish near-term tone as it slips just under the 100-day Simple Moving Average (SMA) and the Bollinger Bands midline. Price holding below these clustered moving-average resistances suggests rallies are likely to meet supply overhead, while the Relative Strength Index (RSI) around 44 points to soft but not extreme downside momentum.

On the topside, initial resistance is seen at the 100-day SMA at 112.32, with the Bollinger midline around 112.62 acting as the next cap, ahead of the upper Bollinger band near 114.01. On the downside, the first noteworthy support emerges at the lower Bollinger band around 111.25, where a break would open the door to a deeper correction within the broader range.

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