AUD/JPY Trades Near 110.90 Ahead of BoJ Decision

AUD/JPY trades at 110.90 in early European sessions. The pair remains below the 100-day simple moving average. This position maintains a bearish bias for the currency cross. Energy prices are elevated due to Middle East conflict. Japan’s oil dependence weighs on the yen. The Bank of Japan meets on Friday for a policy decision.

Traders expect the Bank of Japan to raise rates by 25 basis points. The policy rate is expected to move from 1.00% to 1.25%. Standard Chartered analysts cite robust economic data. Q2 GDP growth was revised upward. Exports remain strong and investment indicators are resilient. Real wages are rising in the Japanese economy.

Central Bank Policy Expectations

Market views are divided on the communication strategy. Some strategists believe hawkish signals will lower bond yields. Others expect yields to rise as terminal rate bets shift. Governor Kazuo Ueda will deliver a speech on Friday. His remarks may clarify the timing of future hikes. The market awaits guidance on the pace of tightening.

Standard Chartered notes the economy can absorb modest tightening. They advise against an overly hawkish message. The central bank has room to move. The macro backdrop supports another rate increase. Policy divergence with other central banks is narrowing. This gradual shift provides support for the yen.

Technical Levels Define Direction

The Relative Strength Index sits at 38.58. This level is below the neutral 50 mark. Price is closer to the lower Bollinger band. The 20-day moving average is above spot prices. These factors suggest persistent downside pressure. An immediate oversold rebound is not indicated.

Immediate resistance is located at 111.63. This level corresponds to the August 10 low. The 20-day Bollinger middle band is near 112.45. The 100-day moving average acts as a cap at 112.90. The upper Bollinger band is near 115.85. Support is found at the 110.00 psychological level.

Support Zones And Risk

A break below 110.00 opens lower targets. The lower Bollinger band is at 109.05. Further selling could reach the March 31 low. That level sits at 108.79. The February 16 low is at 107.73. Traders monitor these levels for confirmation. Momentum remains negative under the current structure.

GN auto markets/forex data confirms the bearish tone. The cross retains a negative outlook. Spot prices remain under key moving averages. The 100-day SMA is a critical barrier. Breaking this level to the upside is required for a trend change. Currently, the path of least resistance is downward.