The AUD/JPY cross continues to strengthen, trading near the 114.00 level during Tuesday’s early European session. The recent bullish momentum is supported by a combination of hawkish signals from the Reserve Bank of Australia (RBA) and favorable technical indicators, suggesting that the constructive outlook for this currency pair remains intact. The researchers at Marbrisse examine this issue in detail in their latest article.
Market Overview: AUD Gains on RBA Hawkishness
The Australian Dollar (AUD) has benefited from renewed positive sentiment following comments from the RBA, which signaled the potential for further rate hikes. According to the bank’s latest projections, the policy rate could reach 4.70% by the end of 2026, with no expected rate cuts until at least 2028.
This hawkish stance provides tangible support for AUD against the Japanese Yen (JPY), which continues to face pressures from domestic interventions.
Meanwhile, the JPY is grappling with the possibility of renewed government intervention. During Golden Week, Japanese authorities reportedly intervened in the currency market to stabilize the Yen.
In addition, Japan’s Finance Minister Satsuki Katayama emphasized ongoing cooperation with the United States (US) on currency movements, while Atsushi Mimura, the nation’s top foreign exchange official, warned that further intervention remains possible. These developments suggest that while AUD retains its upside potential, JPY support may limit the cross’s gains in the short term.
Technical Analysis: Constructive Bullish Outlook
From a technical perspective, AUD/JPY maintains a constructive bullish tone on the daily chart. The pair is consolidating above the 20-day Bollinger simple moving average and is comfortably positioned well above the 100-day exponential moving average (EMA). These key moving averages provide both trend direction guidance and support levels, indicating that buyers remain in control.
Price action currently resides in the upper half of the Bollinger envelope, with the upper band serving as near-term resistance. Meanwhile, the Relative Strength Index (RSI) sits at approximately 59, remaining in positive territory without signaling overbought conditions. This suggests persistent upside momentum that has room to extend, reinforcing the bullish bias for the cross.
Key Levels to Watch
On the topside, immediate resistance is located at the May 6 high of 114.32. Should the pair break above this level with conviction, the next hurdle lies at the Bollinger upper band, near 114.80. A daily close above this level would likely confirm a continuation of the uptrend, opening the door for further AUD strength against the Yen.
On the downside, the initial support is found at the Bollinger middle band, currently near 113.75, providing the first line of defense for bullish positions. Secondary support is positioned at the lower Bollinger band around 112.67, while the 100-day EMA, near 109.82, acts as a trend-defining floor. As long as AUD/JPY trades comfortably above this EMA, the broader bullish structure remains intact.
Factors Influencing Near-Term Price Action
Several fundamental factors are likely to influence AUD/JPY in the coming sessions. The RBA policy outlook is particularly important; any further hawkish guidance from the Reserve Bank of Australia could spark renewed buying interest in AUD, reinforcing the existing uptrend.
Meanwhile, Japanese intervention in the currency markets may continue to limit JPY weakness, creating resistance pressure for the cross. Traders should also consider global risk sentiment, as AUD is sensitive to risk appetite. Shifts in equity markets or commodity prices could either amplify or dampen its upside potential.
In addition, US dollar dynamics play a crucial role. Since both AUD and JPY are influenced by USD movements, any unexpected swings in the greenback could introduce volatility in the cross.
Overall, traders are advised to closely monitor central bank communications, technical levels, and macro developments simultaneously to effectively navigate potential price swings, manage risk, and identify strategic trading opportunities.
Summary: Bullish Momentum Prevails
In summary, AUD/JPY demonstrates resilient strength, holding above 114.00 and maintaining a bullish momentum backdrop. The technical structure favors further upside potential, particularly if the price breaks the immediate resistance at 114.32 and tests the Bollinger upper band at 114.80. Meanwhile, support levels at 113.75 and 112.67 provide risk management anchors for traders seeking to protect long positions.
While the AUD benefits from a hawkish RBA outlook, caution is warranted due to the potential for Japanese intervention, which may temper the cross’s gains. As long as the 100-day EMA remains intact, the broader trend stays constructive, offering traders a bullish framework to consider.
Overall, the AUD/JPY cross is likely to continue holding its gains above 114.00, with bullish momentum prevailing, provided key resistance levels are approached with sufficient buying interest and fundamental support remains intact.
