AUD/JPY Price Forecast: Pair Holds Above 113.00 as Hawkish RBA Fuels Uptrend

The AUD/JPY currency pair has strengthened above the 113.00 level, extending its recent gains as a hawkish stance from the Reserve Bank of Australia (RBA) continues to support the Australian dollar. The pair is now trading comfortably above the 100-day Simple Moving Average (SMA), a key technical indicator that often signals a sustained uptrend.

Technical Setup: Uptrend Confirmed Above Key Moving Average

The 100-day SMA has acted as a reliable support level in recent sessions, with the pair bouncing off it multiple times before pushing higher. The current price action suggests buyers are in control, with resistance levels now being tested around the 113.50–114.00 zone. A break above this area could open the door toward the 115.00 psychological level.

On the downside, the 100-day SMA near 112.80 now serves as immediate support. A failure to hold above this moving average could see the pair retest the 112.00 handle, where the 50-day SMA also converges. However, the overall momentum remains bullish as long as prices stay above the 100-day SMA.

Fundamental Drivers: RBA Policy Divergence

The RBA has maintained a relatively hawkish tone compared to other major central banks, including the Bank of Japan (BoJ). While the BoJ continues to pursue ultra-loose monetary policy, the RBA has signaled that further rate hikes may be necessary to curb inflation. This policy divergence has widened the interest rate differential between the two currencies, making the Australian dollar more attractive to yield-seeking investors.

Market participants are now pricing in a higher probability of another RBA rate hike at the next meeting, which could provide additional support for AUD/JPY. Conversely, any dovish surprise from the RBA or a hawkish shift from the BoJ could trigger a sharp reversal.

What This Means for Traders

For forex traders, the current setup offers a clear trend-following opportunity. The pair’s ability to hold above the 100-day SMA reinforces the bullish bias, and pullbacks toward the moving average could be seen as buying opportunities. However, risk management remains crucial, as the market is sensitive to shifts in central bank rhetoric and broader risk sentiment.

Key economic data releases this week, including Australian employment figures and Japanese inflation data, will be closely watched for further direction. A stronger-than-expected Australian jobs report could accelerate the uptrend, while soft data may lead to consolidation.

Conclusion

The AUD/JPY pair is displaying a robust uptrend, supported by both technical and fundamental factors. The hawkish RBA stance and the pair’s position above the 100-day SMA suggest further upside potential in the near term. Traders should monitor key resistance levels and upcoming economic data for confirmation of the trend’s sustainability.

FAQs

Q1: Why is the 100-day SMA important for AUD/JPY?
The 100-day SMA is a widely followed technical indicator that helps identify the medium-term trend. When the price trades above it, it is generally considered a bullish signal. For AUD/JPY, holding above this level indicates that buyers are in control and the uptrend is intact.

Q2: How does the RBA’s hawkish stance affect AUD/JPY?
A hawkish RBA means the central bank is inclined to raise interest rates to control inflation. Higher interest rates make the Australian dollar more attractive to investors, increasing demand for AUD and pushing the AUD/JPY pair higher, especially against the yen, which is supported by a very low-yielding BoJ policy.

Q3: What are the key levels to watch in AUD/JPY?
Immediate resistance is at 113.50–114.00, with a potential target of 115.00 if broken. On the downside, support is at the 100-day SMA near 112.80, followed by the 112.00 level where the 50-day SMA converges. A break below 112.00 could signal a trend reversal.