AUD/JPY Price Forecast: Dip to 114.00 Tests Support, But Bullish Bias Intact Above Key Average

The Australian dollar edged lower against the Japanese yen during Tuesday’s trading session, with the AUD/JPY cross slipping toward the 114.00 handle. Despite the intraday pullback, the pair continues to trade above its 100-day simple moving average (SMA), a technical threshold that has underpinned the recent bullish structure.

Technical backdrop: Key support holds firm

The 100-day SMA has acted as a reliable support level over the past several weeks, providing a floor during pullbacks. As of the latest session, the pair is hovering near 114.00, a round number that often attracts both technical traders and algorithmic interest. A sustained break below this level could expose the next support zone near 113.50, but for now, the broader trend remains tilted to the upside.

The recent slip appears to be driven by modest yen strength rather than a fundamental shift in the Australian dollar’s outlook. The Reserve Bank of Australia’s (RBA) recent hawkish stance, coupled with resilient commodity prices, continues to provide a supportive backdrop for the Aussie.

What’s driving the pair?

Currency markets remain sensitive to interest rate differentials and risk sentiment. The Australian dollar has benefited from the RBA’s signal that further tightening may be necessary if inflation proves sticky. Meanwhile, the Bank of Japan (BoJ) maintains its ultra-loose monetary policy, keeping the yen under structural pressure.

From a risk perspective, the AUD/JPY pair is often used as a proxy for global risk appetite. A dip in equity markets or renewed trade tensions could accelerate the downside, but absent such catalysts, the bullish structure is likely to persist.

What traders should watch

Immediate resistance is seen at 114.50, followed by the recent swing high near 115.00. On the downside, a close below the 100-day SMA would be the first technical warning sign for bulls. The next major support lies at 113.20, the 50-day SMA.

Conclusion

The AUD/JPY remains in a constructive technical position despite the slip toward 114.00. The 100-day moving average continues to provide a solid foundation for the bullish trend. Traders will watch for a bounce from current levels to confirm that the pullback is a healthy correction within an uptrend rather than the start of a deeper reversal.

FAQs

Q1: Why is the 100-day moving average important for AUD/JPY?
The 100-day SMA is a widely followed technical indicator that smooths out price fluctuations. When the pair trades above it, it suggests the medium-term trend is bullish. A break below could signal a shift in momentum.

Q2: What could cause AUD/JPY to break below 114.00?
A sustained break below 114.00 could be triggered by a sudden risk-off move in global markets, disappointing Australian economic data, or an unexpected hawkish shift from the Bank of Japan.

Q3: Is the Australian dollar expected to strengthen further?
Much depends on the RBA’s policy path and commodity prices. If the RBA continues to signal rate hikes and China’s economic recovery gains traction, the Aussie could find additional support against the yen.