AUD/JPY outlook: climbs toward 110.00 amid accelerating yen weakness

crypthub

about 9 hours ago

Price Surge and Technical Momentum

The AUD/JPY pair has climbed to 109.85, just shy of the 110.00 psychological barrier, marking a 3.2% weekly gain. A “golden cross” formed as the 50‑day moving average crossed above the 200‑day line, while the RSI sits at 68, indicating strong bullish pressure. Trading volume is up 40% versus the monthly average, confirming institutional participation. Key resistance sits at 110.25, with support levels at 108.50 and 107.20.

Yen Weakness and Carry‑Trade Dynamics

Japan’s ultra‑accommodative policy, including yield‑curve control and negative rates, keeps the yen depressed. Persistent inflation above target and a trade deficit further erode yen demand. The ~4.25% interest‑rate gap allows investors to borrow cheap yen and buy higher‑yielding Australian dollars, fueling demand for AUD/JPY. Historical divergences have produced similar rally patterns, suggesting continued upside potential.

Australian Dollar Strength and Commodity Factors

The Reserve Bank of Australia has raised rates four times since late‑2024, leaving the cash rate at 4.35% and supporting the AUD. Low unemployment, robust commodity exports such as iron ore and LNG, and rising lithium production add fundamental backing. China’s manufacturing PMI returned to expansion, hinting at stronger demand for Australian raw materials. These factors together reinforce the AUD’s resilience against major currencies.

Outlook, Risks, and Forecast

Analysts project AUD/JPY could test 112.00 by mid‑2025 if the rate differential and risk appetite persist. However, a sudden BOJ policy tighten, a commodity price slump, or a global risk‑off could reverse the trend. The RBA may deliver another 25‑bp hike by June, further widening differentials. Traders should watch the 110.25 ceiling for a breakout and the 108.50 floor for support.