The AUD/JPY exchange rate is currently trading in the red, hovering around 110.60 during the early European session on Thursday. Support for the Japanese Yen (JPY) is being bolstered by some hawkish comments from Japanese officials regarding the economy, particularly against the Australian Dollar (AUD).
On Wednesday, Ryozo Himino, the Deputy Governor of the Bank of Japan (BoJ), remarked that underlying inflation is steadily progressing towards the central bank’s target of 2%. Earlier in the week, BoJ Governor Kazuo Ueda had mentioned that underlying inflation is approaching this target as well, and he suggested that should the bank opt to raise the short-term policy rate, long-term rates would likely follow suit in a stable manner.
Meanwhile, Andrew Hauser, a member of the Reserve Bank of Australia’s (RBA) monetary policy board, indicated on Wednesday that the outlook for inflation is significantly worse than previously anticipated by the bank. Following Hauser’s comments, the likelihood of an interest rate hike during the November policy meeting increased from 30% to 45%, as reported by the Guardian.
Japan’s export growth continues, but results are mixed
Deutsche Bank analysts noted that preliminary data for September reflect a strong performance in Japan’s external sector, with exports reportedly rising by 16.7% compared to September of last year, thanks in part to solid demand for semiconductors and AI-related products. This marks a continuous growth streak, now 13 months in a row, following a 9.3% increase in August. However, this growth fell short of the expected 21.3% rise. On the imports side, imports have increased by 18.9% year-on-year, which is below the predicted 20.4% increase. This weaker result has contributed to a reduction in Japan’s trade deficit, dropping to -536.6 billion yen in September from -1.11 trillion yen in the previous month.
Technical Analysis: AUD/JPY shows a slightly bearish outlook below the 100-day SMA
Analysis of the daily chart shows that the AUD/JPY maintains a mildly bearish outlook, wavering below the 100-day simple moving average (SMA) while still trading above the 20-day Bollinger SMA. This suggests a limited recovery within a larger corrective phase. The Relative Strength Index (RSI) is around 50, indicating neutral momentum, supporting the idea of consolidation rather than a significant upward reversal, as long as the resistance above holds strong.
On the upside, initial resistance is identified at the upper Bollinger band near 111.15, with a stronger barrier at the 100-day SMA around 112.10. If there’s a decisive breakout above this, a rally could follow, targeting the high of 113.55 from June 16, and then the July 27 high of 114.67.
Conversely, immediate support is at the 20-day Bollinger midline around 110.20, with the psychological level of 110.00 following closely. Further down, the lower limit of the Bollinger band around 109.20 is a crucial level to monitor; a break below this could lead to more substantial losses.
