AUD/JPY Price Forecast: Bearish bias holds below 100-day SMA as pair falls below 110.50

• Around 110.35, AUD/JPY edges lower in early Asian trading on Monday.
• Below the 100-day SMA, the cross retains a bearish bias, reinforced by negative RSI momentum.
• Immediate resistance stands at 111.10, while 110.15 is the first downside target in focus.

With AUD/JPY trading near 110.35, the cross remains lower in Monday’s early European session. The Japanese Yen (JPY) gains against the Australian Dollar (AUD), as hawkish rhetoric may bolster expectations of an interest rate increase from the Bank of Japan (BoJ) this year.

A Reuters poll shows that most economists anticipate unchanged rates at Friday’s October policy meeting, before a quarter-point increase at the subsequent meeting in December.

Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said: "It's a historical moment for the BOJ, though it faces a more ‌challenging task now that it needs to step not just on the accelerator but the brakes," adding: "The BOJ will probably scrutinise upcoming data and market moves in deciding whether to raise rates in December, or hold until January,”

In Australia, interest rates may have to rise again, Reserve Bank of Australia (RBA) Chief Economist Sarah Hunter indicated on Monday. She cautioned that inflation is still too high and that recent overseas price pressures risk taking root in Australia.

Gradual BoJ tightening outlook limits support for the Yen

Recent gains in the Yen are unlikely to prompt a faster Bank of Japan tightening cycle, strategists at Brown Brothers Harriman caution, citing “headline and core CPI inflation tracking below its 2026 projection of 2.5%.” Market pricing is also restrained, they observe: “the swaps curve price in just 2% odds of a 25bps BoJ rate hike to 1.50% on October 30, and 80% probability of a hike on December 18,” pointing to expectations of measured, data-dependent normalisation rather than a sudden policy change.

BoJ’s Himino keeps Yen bulls attentive to AI-led inflation risks

An FXS Speechtracker score of 8.2/10 for BoJ’s Himino is in line with the historic average, indicating a policy tone that remains consistently firm. His focus on robust AI-related capital expenditure and exports, increasing medium- and long-term inflation expectations, and underlying inflation approaching the 2% target represents a distinctly hawkish departure from the traditional ultra-accommodative stance.

Expectations of gradual normalisation are reinforced by warnings that delaying policy adjustments could intensify upside price risks and harm the economy, while financial conditions remain accommodative and real rates low. The speech favours an outlook for further tightening, supporting the Yen. Dollar/Yen could consequently face downside risks if sustained inflation and strong bank lending lead markets to bring forward their expectations for BoJ policy changes.

Technical Outlook: AUD/JPY retains bearish bias below the 100-day SMA

Trading below both the 100-day simple moving average (SMA) and the upper Bollinger band leaves AUD/JPY with a bearish short-term outlook on the daily chart. Although the pair is trying to find stability above support at the middle Bollinger band, the Relative Strength Index (RSI) reads 47.01, just under the neutral 50 threshold. This suggests limited recovery momentum rather than a convincing turn towards bullish conditions.

The middle Bollinger band provides the nearest downside support at 110.15. Below that lies a weaker structural floor around 109.21 at the lower Bollinger band; a breach could bring the 15 October low of 108.64 into view. 

A recovery would first encounter resistance near 111.10 at the upper Bollinger band, followed by the 100-day SMA at 112.05. Beyond those levels, the 18 August high of 113.61 presents the next obstacle. 

(The technical analysis of this story was written with the help of an AI tool. Know more.)