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AUD/JPY Climbs Above 110.00 as RBA Outlook Supports Recovery
Traders' Opinions
Summary:
AUD/JPY rebounds above 110.00 as hawkish RBA remarks and stronger Chinese growth support the Aussie. However, potential BoJ tightening and Japanese FX intervention could limit further gains ahead of the October 29–30 policy meeting.
Buy
TradingAUDJPY
EXP
110.500
Entry Price
112.600
TP
108.500
SL
110.936 +0.191 +0.17%
0
Point
Flat
108.500
SL
CLOSING
110.500
Entry Price
112.600
TP
The Australian Dollar is gaining ground against the Japanese Yen, with AUD/JPY extending its recovery for a second consecutive session after hitting an eight-month low near 108.65 last Thursday. The pair has climbed to around 110.35 during European trading, advancing more than 0.60% on the day as improving sentiment toward the Australian Dollar supports the rebound.
The latest move reflects a combination of hawkish signals from the Reserve Bank of Australia (RBA) and stronger-than-expected economic growth in China. RBA Assistant Governor Christopher Kent noted that there are reasonable indications that neutral interest rates are rising both domestically and globally. His remarks reinforce expectations that Australian monetary policy could remain relatively restrictive, providing support for the Aussie.
China's economic performance has also strengthened the Australian Dollar's appeal. The world's second-largest economy grew by 4.5% year-over-year in the third quarter, accelerating from 4.3% in the previous quarter and exceeding market expectations. Given Australia's close economic ties with China, stronger growth prospects can improve sentiment toward the Australian currency.
Meanwhile, the Japanese Yen remains under pressure as expectations for an immediate Bank of Japan (BoJ) rate increase have eased. Media reports indicated that BoJ officials see limited justification for consecutive rate hikes unless upside inflation risks rise sharply. This has reduced near-term support for the Yen and helped AUD/JPY extend its recovery.
However, the outlook for the Japanese currency remains uncertain. BoJ Governor Kazuo Ueda stated that underlying inflation is approaching the central bank's 2% target, keeping the prospect of further monetary tightening in focus. Speculation that Japanese authorities could intervene to support the Yen also presents a potential obstacle to further gains in AUD/JPY.
Looking ahead, traders are likely to remain cautious ahead of the BoJ's October 29–30 policy meeting. While stronger Chinese growth and hawkish RBA commentary are supporting the Australian Dollar, confirmation of a sustained recovery in AUD/JPY will depend on continued buying interest and the evolving monetary policy outlook in both countries.
Technical Analysis
AUD/JPY is showing signs of a potential bullish recovery after rebounding from the 108.65–109.40 support zone on the daily chart. Price is currently trading around 110.49, with buyers attempting to regain control following the sharp decline from the September highs near 114.90.
The technical structure suggests that the pair may be forming a short-term base. Multiple reactions within the highlighted support zone indicate buying interest, while the recent rebound toward 110.50 signals improving bullish momentum. However, price is still recovering from a broader bearish move, so confirmation through a sustained break above nearby resistance is necessary before assuming a stronger reversal.
A successful move above 110.80 could open the way toward 111.70, followed by 112.60–113.00. If bullish momentum continues, the next major resistance zone lies around 114.70–115.40. On the downside, failure to hold above 109.40 would expose the lower boundary near 108.65, potentially extending the bearish structure.
My preferred scenario is a bullish recovery toward the 112.60–114.50 region, provided price maintains support and confirms a breakout above immediate resistance. A rejection around 110.80–111.00, however, could delay the recovery and trigger another retest of support.
TRADE RECOMMENDATION
BUY AUD/JPY
ENTRY PRICE: 110.50
STOP LOSS: 108.50
TAKE PROFIT: 112.60
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