Daily Chart Signals
On the daily chart, the bias remains mildly bullish while price holds above the rising 100-day exponential moving average near 107.35. The RSI has eased towards the midline, pointing to possible near-term consolidation. Resistance is seen at 111.25, then 112.61 (March 19 high) and 113.65 (upper Bollinger Band). Support sits at 110.00, followed by 108.75 (lower Bollinger Band) and 107.35 (100-day EMA). The Yen is influenced by Japan’s economic performance, Bank of Japan policy, Japanese–US bond yield spreads, and risk sentiment. The BoJ’s ultra-loose policy from 2013 to 2024 weakened the Yen, while the 2024 shift away from that stance has offered some support and narrowed 10-year yield differentials. We recall the analysis from last year, around this time in 2025, when AUD/JPY was holding above 110.00 with a mildly bullish bias. The situation has shifted significantly since then, as the pair now trades closer to 101.50. This change suggests the expected strength in the Australian dollar did not last.Policy And Positioning
The expectation of Reserve Bank of Australia rate hikes, which supported the pair in early 2025, has now completely reversed. With Australia’s latest CPI data for the first quarter of 2026 showing inflation has cooled to 2.8%, the market is now pricing in potential rate cuts later this year. This has removed a key pillar of support for the AUD. On the other side, the Bank of Japan has continued its slow but steady policy normalization, which was just beginning when we looked at this in 2025. This has narrowed the interest rate differential that previously weakened the yen for years. The spread between 10-year Australian and Japanese government bonds has tightened by over 50 basis points in the last year, making the yen more attractive. While the specific Middle East tensions mentioned in 2025 have subsided, ongoing global trade uncertainties continue to support the yen’s safe-haven appeal. Consequently, the technical levels from last year, like the 111.25 resistance, are no longer relevant. We are now watching for a potential break below the 100.00 psychological level, which would signal further downside. For the coming weeks, traders should consider positioning for further downside or range-bound trading. Buying put options on AUD/JPY with a strike price below 100.00 could be a viable strategy to profit from a continued decline. Selling call options with strikes well above 103.00 would be another way to express the view that significant upside is unlikely. Create your live VT Markets account and start trading now.
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