AUD/JPY Softens Below 112.50 as Bearish Bias Holds Under 100-Day SMA

The AUD/JPY cross slipped below the 112.50 level during Tuesday’s Asian trading session, extending its recent decline as the pair continues to trade beneath the 100-day simple moving average (SMA), a technical signal that has kept near-term bearish pressure intact.

Technical Outlook: Persistent Bearish Bias Below 100-Day SMA

As of the latest trading data, AUD/JPY is hovering near 112.30, down roughly 0.2% on the day. The pair has been unable to reclaim the 100-day SMA, which currently sits around 113.00, a level that has acted as dynamic resistance since early this month. The failure to break above this moving average has reinforced the bearish sentiment among short-term traders, with immediate support now seen at the 112.00 psychological level, followed by the recent swing low near 111.60.

The 14-day Relative Strength Index (RSI) remains below the 50-neutral mark, currently at 45, suggesting that downside momentum is still dominant without being overextended. A sustained move below 112.00 could open the door toward the 111.00 handle, while any rebound would likely face stiff resistance at the 100-day SMA and then at the 113.50 zone, where the 50-day SMA converges.

Market Drivers: Diverging Monetary Policy Expectations

The Australian dollar has come under pressure as market participants adjust their expectations for the Reserve Bank of Australia’s (RBA) policy path. Recent domestic data, including softer employment figures and a moderation in inflation, have led traders to price in a higher probability of an RBA rate cut in the coming months. In contrast, the Japanese yen has found some support from safe-haven flows amid ongoing global growth concerns and geopolitical uncertainties, as well as from the Bank of Japan’s (BoJ) cautious stance on further policy normalization.

This policy divergence is a key driver behind the pair’s recent weakness. While the BoJ has signaled a gradual exit from ultra-loose monetary policy, the pace remains slow, and any hawkish surprises from the BoJ could further strengthen the yen. On the other hand, any hawkish commentary from RBA officials or stronger-than-expected Australian data could help the AUD recover, but the technical picture suggests that sellers remain in control for now.

Implications for Traders and Investors

For forex traders, the current setup offers a clear level to watch: the 112.00 support. A break below this level could trigger further selling, targeting the 111.60 and 111.00 levels. Conversely, a daily close above the 100-day SMA at 113.00 would negate the near-term bearish bias and could lead to a test of the 113.50–114.00 resistance zone. Given the prevailing risk-off sentiment in global markets, traders should remain cautious and employ appropriate risk management strategies.

Conclusion

AUD/JPY remains under pressure as it trades below the 100-day SMA, with the near-term bias staying bearish. The pair’s direction will likely hinge on upcoming economic data from Australia and Japan, as well as shifts in global risk sentiment. Key levels to monitor are 112.00 on the downside and 113.00 on the upside, with a break of either likely to set the tone for the next move.

FAQs

Q1: What is the significance of the 100-day SMA for AUD/JPY?
The 100-day SMA is a widely watched technical indicator that helps traders gauge the medium-term trend. When the price is below this average, it is often seen as a bearish signal, suggesting that sellers have the upper hand. In the case of AUD/JPY, the failure to break above the 100-day SMA has reinforced the current downward bias.

Q2: What are the key support and resistance levels for AUD/JPY right now?
Immediate support is at 112.00, followed by 111.60 and 111.00. On the upside, resistance is at the 100-day SMA near 113.00, then at 113.50 and 114.00. A daily close above 113.00 would likely signal a shift in momentum.

Q3: How do RBA and BoJ policies affect the AUD/JPY exchange rate?
The AUD/JPY pair is highly sensitive to monetary policy expectations from both the Reserve Bank of Australia and the Bank of Japan. If the RBA is expected to cut rates while the BoJ is seen as normalizing policy, the yen tends to strengthen against the Australian dollar, pushing the pair lower. Conversely, if the RBA turns hawkish or the BoJ remains dovish, the pair could rally.