AUD/JPY Price Forecast: Strengthens above 113.50 as bullish momentum persists above 100-day SMA

The AUD/JPY cross trades in positive territory near 113.55 during the early European session on Friday. The Australian Dollar (AUD) strengthens against the Japanese Yen (JPY) despite the cooling labor market. The minutes of the Reserve Bank of Australia (RBA) meetings will be released next Tuesday. 

Australia's Unemployment Rate ticked up to 4.5% in July from 4.4% in June, the Australian Bureau of Statistics showed on Thursday. Meanwhile, employment unexpectedly fell by 15,800 jobs in July, versus a rise of 80,200 prior, worse than the market expectations of a 15,000 growth. The weaker jobs data has led markets to scale back expectations for further aggressive interest rate hikes by the Reserve Bank of Australia (RBA).  

“The rise in unemployment marginally strengthens the case for the RBA to hold, particularly given broader signs of weakness in the economy,” said Ray White chief economist Nerida Conisbee. 

Ashwin Binwani, Alpha Binwani Capital’s founder, said institutional investors remained positioned in carry trades against a basket of G10 currencies, led by the AUD. There are also signs that some traders are rebuilding bearish bets on the JPY, as the impact of the intervention has faded.

Standard Chartered pulls forward BoJ hike call to September

Analysts at Standard Chartered have brought forward their expectations for the Bank of Japan’s next policy move, now projecting that the BoJ will “hike by 25bps on 18 September from October previously.” This revision marks a shift in the bank’s anticipated timing of Japan’s rate normalisation, underscoring a slightly more front-loaded tightening profile than previously assumed.

Technical Analysis: The bullish tone of AUD/JPY remains intact

In the daily chart, AUD/JPY retains a constructive bullish bias as it holds above the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line, suggesting underlying demand on dips after the latest pullback from recent highs. The Relative Strength Index (RSI) at 58.12 stays in positive territory but below overbought levels, hinting at steady bullish momentum without signs of exhaustion yet.

On the topside, initial resistance emerges at the July 22 high of 114.40, en route to the upper Bollinger Band near 114.75. The next hurdle to watch is the 115.00 psychological level, where buyers could face profit-taking and short-term supply. 

On the downside, immediate support is seen at the 100-day SMA at 113.10, followed by the Bollinger middle band at 112.45. A deeper setback would expose the August 10 low of 111.63, and then the lower Bollinger Band as a more distant support level around 110.15.