AUD/JPY Price Forecast: Gains ground to near 114.50, bullish tone prevails above 100-day SMA

The AUD/JPY cross trades in positive territory near 114.45 during the early European trading hours on Thursday. The Australian Dollar (AUD) strengthens against the Japanese Yen (JPY) as hotter-than-expected Australian Consumer Price Index (CPI) inflation data has bolstered market expectations for a Reserve Bank of Australia (RBA) interest rate hike.

Traders are repricing the risk of a fourth rate increase from the Australian central bank this year, with a move in September now priced at 38%, up from just 17% before, according to Reuters. They are now fully expecting a rate hike by February next year.

Data released by the Australian Bureau of Statistics showed on Wednesday that the monthly CPI climbed 1.0% in July, versus a decline of 0.1% in June, exceeding forecasts of a 0.8% rise. 

Bank of Japan (BoJ) Deputy Governor Ryozo Himino on Thursday emphasized the need for timely interest rate hikes with a ‌focus on mounting inflation risks, adding that dominant market expectations for a near-term increase in borrowing costs. However, Himino refrained from giving explicit signals on the timing of the next rate increase, saying only that "in-depth deliberations" on price pressures should be held at each policy meeting.

Japan intervention fears and BoJ hike prospects keep JPY supported

Rabobank’s FX strategists argue that the policy mix in Japan remains central to the Yen outlook. They note that “if the BoJ does hike rates, the MoF may repeat its July strategy of fanning the market move with more intervention,” reinforcing the impact of any policy shift. In their view, “fear of further FX intervention in support of the JPY coupled with the prospect of a BoJ September rate hike and the softer USD suggests scope for USD/JPY to trade in the 158-157 area on a 3-to-6-month view.”

Technical Analysis: AUD/JPY keeps a bullish vibe in the near term

In the daily chart, AUD/JPY extends its advance above the 100-day Simple Moving Average (SMA) and the 20-day Bollinger middle band, which both reinforce a constructive bullish bias. Price is now pressing toward the upper Bollinger Band, while the Relative Strength Index (14) at 64.33 stays in positive territory, hinting that upward momentum remains firm though edging closer to overbought conditions.

On the topside, immediate resistance emerges at the upper Bollinger Band around 115.00, where fresh supply could slow the rally. Any follow though buying above this level could pave the way to 115.50. 

On the downside, initial support level is located at the August 24 low of 113.60, followed by the 100-day SMA at 113.20. A decisive break below the latter could expose the 20-day Bollinger middle band near 112.55, with a deeper structural floor aligning with the lower Bollinger Band around 110.15 if a broader correction unfolds.