The AUD/JPY currency pair weakened to around 112.55 during early European trading hours on Friday, reflecting a bearish near-term outlook as the Japanese Yen (JPY) gained strength against the Australian Dollar (AUD) [1]. This move comes amid heightened market vigilance for potential currency intervention by Japanese authorities, following comments from Mitsuhiro Furusawa, Japan's former top currency diplomat, who stated that Tokyo may conduct joint JPY intervention with the United States 'at any time' and should signal the possibility of faster-than-expected interest rate hikes to curb the Yen's decline [1].
Market data from Tokyo Tanshi indicates a significant shift in expectations for a Bank of Japan (BoJ) rate hike, with the probability rising to 76% for September, compared to just 24% on July 30 [1]. DBS Group Research reports that the Japanese Yen’s undervaluation has started to ease after Japan's second FX market intervention this year, which was coordinated with the US. This rare joint action has helped correct the Yen's mispricing from record levels, underscoring the impact of official intervention on currency markets [1].
Technical analysis shows that AUD/JPY remains capped below the Bollinger middle band and the 100-day moving average, maintaining a bearish bias. The Relative Strength Index (14) stands at 50.43, indicating a neutral, consolidative tone, but downside risks persist as long as the pair stays under the 100-day average. Immediate resistance is noted at 112.70 (Bollinger middle band) and 112.90 (100-day moving average), with a daily close above these levels required to ease selling pressure and target higher levels such as the July 27 high of 114.67 and the Bollinger upper band near 115.40. On the downside, initial support is at the August 10 low of 111.63, with a key level at the Bollinger lower band at 110.00, where a break could signal a deeper corrective phase [1].
The Japanese Yen's value is influenced by the performance of the Japanese economy, Bank of Japan policy, yield differentials between Japanese and US bonds, and risk sentiment among traders. The BoJ's interventions and policy decisions remain central to the Yen's trajectory [1].
CONCLUSION
The AUD/JPY pair is under pressure as the Yen strengthens on intervention speculation and rising expectations for a BoJ rate hike. Technical resistance levels suggest continued bearish momentum unless breached, while official actions have started to correct Yen undervaluation. Market participants remain alert for further intervention and policy shifts, which could drive future volatility.