AUD/JPY Surges Toward 110.00 as Yen Weakness Accelerates
AUD/JPY has rallied sharply toward the psychological 110.00 level as Japanese yen weakness accelerates. The pair trades near 109.85, up about 3.2% over the past week and following a bullish trend since January 2025. Technicals show a 50/200-day golden cross, RSI at 68, rising volumes (~40% above monthly average) and MACD bullish — all indicating continued upside momentum. Key levels: resistance 110.25, support 108.50 and 107.20 (50-day MA). Fundamentals driving the move include sustained BOJ ultra‑accommodative policy (yield curve control, negative short-term rates), persistent Japan trade deficits and higher inflation, versus a hawkish Reserve Bank of Australia (cash rate ~4.35%) supported by strong commodity exports, low unemployment and robust CPI (4.1%). The carry trade — borrowing yen to buy higher-yielding AUD — amplifies buying pressure. Institutional forecasts project AUD/JPY toward 112.00 by mid‑2025 if policy divergence and risk sentiment persist. Traders should monitor BOJ guidance, RBA decisions, commodity prices and global risk sentiment. Immediate trading strategy considerations: momentum favors long/carry positions while stops should guard against sudden risk-off flows or unexpectedly rapid BOJ normalization.
Bullish
The report outlines strong technical momentum (golden cross, RSI 68, rising volumes, bullish MACD) alongside clear fundamental drivers favoring AUD over JPY: a large interest rate differential (RBA hawkish vs BOJ ultra‑accommodative), robust Australian macro data and supportive commodity prices. These conditions encourage carry trades — a sustained structural flow that tends to extend rallies in AUD/JPY. Institutional forecasts targeting 112.00 and historical precedents during policy divergence reinforce a bullish bias. Short-term risk remains from abrupt risk-off moves or faster-than-expected BOJ normalization, which could trigger yen strength and intraday reversals. For traders: expect continued upside potential and consider momentum or carry-based long positions with disciplined stop-losses near support levels (108.50/107.20). Monitor BOJ minutes, RBA guidance, global risk sentiment and commodity prices for signals that could shift the trend.