The AUD/JPY currency pair traded in positive territory around 113.05 during early European trading hours on Monday, supported by a hawkish stance from the Reserve Bank of Australia (RBA) [1]. RBA Governor Michele Bullock reiterated last week that the central bank remains strictly focused on curbing inflation, following three interest rate hikes earlier this year that raised the cash rate to 4.35% [1]. Bullock emphasized that inflation remains too high and stated, 'the board will do what it considers necessary to achieve our mandate to deliver price stability and full employment' [1].
Despite the bullish momentum for the Australian Dollar, the potential upside for AUD/JPY may be limited due to concerns about possible intervention by Japanese authorities. Japanese Finance Minister Satsuki Katayama stated on Friday that officials are closely monitoring the situation and reserve the right to take 'decisive action' and 'respond appropriately at any time' against excessive volatility in the currency markets [1].
From a technical perspective, AUD/JPY maintains a constructive stance above the 100-day simple moving average (SMA), with the Bollinger lower band providing nearby downside protection and keeping the broader uptrend intact despite a recent pullback from highs [1]. The Relative Strength Index (RSI) stands at 43.94, below the neutral 50 line, indicating fading bullish momentum but not yet signaling a decisive trend reversal as the price remains above the major average [1]. Key resistance levels are identified at the Bollinger middle band around 113.90 and the upper band at 114.90, while a daily close below 112.90 could expose the 100-day SMA at 111.60, where stronger demand is expected to emerge [1].
CONCLUSION
The AUD/JPY pair is currently supported by the RBA's hawkish policy stance and remains in a medium-term uptrend above key technical levels. However, upside potential is tempered by the risk of Japanese intervention, as authorities have signaled readiness to act against excessive volatility. Market participants should monitor both central bank communications and technical levels for further direction.