AUD/JPY traded higher near 114.65 in early European trading on Thursday. Markets are watching the meeting between US President Donald Trump and China’s President Xi Jinping in Beijing on Thursday and Friday.
China’s Xinhua reported that Xi told US chief executives on the trip that China’s door would “only open wider”. Xi said US firms would have more opportunities in China.
Us China Meeting Focus
The meeting took place at the Great Hall of the People and included Elon Musk, Nvidia’s Jensen Huang, and Apple’s Tim Cook. Trump said on Tuesday he would ask Xi to “open up” China.
On the daily chart, AUD/JPY stayed above the 100-day Simple Moving Average and the Bollinger mid-band. The 14-day RSI was about 63, still in bullish territory and not at overbought levels.
Resistance sits near 115.00 and the Bollinger upper band. Support levels include 114.02, then about 113.80, then 112.63, with the 100-day SMA at 110.18.
The Japanese yen is influenced by Japan’s economy, Bank of Japan policy, the gap between Japanese and US bond yields, and market risk sentiment. The BoJ ran ultra-loose policy from 2013 to 2024, then began to unwind it in 2024, while the 10-year US–Japan yield gap has been narrowing.
Yen Drivers And Policy Shift
Looking back, the optimism surrounding US-China relations during summits in the last decade now feels like a distant memory for the AUD/JPY pair. While the cross once flirted with levels near 115.00 on hopes of China opening its economy, today we see a different picture with the pair struggling around 105.50. The fundamental drivers have clearly shifted, and sentiment is no longer as bullish as it was.
The Australian dollar’s fate remains tied to China, but the narrative has soured. Recent data showed China’s Caixin Manufacturing PMI for April 2026 unexpectedly dipped to 49.8, indicating a contraction and raising concerns about demand for Australian commodities. This contrasts sharply with the expansionary figures we saw throughout much of 2025, suggesting the economic recovery is losing steam and weighing on the Aussie.
On the other side of the pair, the Bank of Japan’s stance has completely changed since it began unwinding its ultra-loose policy back in 2024. After two small rate hikes in 2025, the market is now pricing in a greater than 70% probability of another 15 basis point hike by the end of the third quarter to combat persistent inflation. This policy divergence from the Reserve Bank of Australia, which is holding steady, continues to favor a stronger yen.
Given this backdrop, we should consider strategies that benefit from a potential decline in AUD/JPY over the next several weeks. Buying put options with a strike price below the 104.00 support level, for expiry in late June 2026, could offer a calculated way to position for further downside. This provides protection and defined risk if the pair breaks below its current consolidation range.
The technical picture supports this cautious view, a significant change from the bullishness of the past. We saw a “death cross” pattern form late in 2025, where the 50-day moving average crossed below the 200-day average, signaling a long-term bearish trend that remains intact. The Relative Strength Index is currently hovering around 45, well out of bullish territory and indicating that sellers have control.
