AUD\/JPY rose to about 109.60 in early European trade on Tuesday, moving above 109.50. Buying interest followed continued concern about Japan\u2019s fiscal position and expectations of more economic stimulus.<\/p>\n
The Australian Dollar has support from expectations that the Reserve Bank of Australia may keep a tightening bias. Recent economic data have strengthened the view that the RBA will remain focused on inflation pressures.<\/p>\n
Markets are awaiting Australia\u2019s Consumer Price Index data due on Wednesday. Headline CPI is forecast at 3.7% year on year in January, down from 3.8% previously, and a softer reading could weigh on the AUD.<\/p>\n
On the daily chart, the pair is trading above the 100-period EMA, with the EMA slope still pointing higher. Price is also above the middle Bollinger Band, while the bands are narrowing, which points to lower volatility and a mild upward tilt.<\/p>\n
The RSI is at 59.95 and rising above its midline, showing positive momentum without an overbought signal. Resistance is at 110.60 at the upper Bollinger Band, while support is at 109.00 at the middle band and 107.37 at the lower band.<\/p>\n
The AUD\/JPY cross is showing strength above 109.50, and we see reasons for this to continue. Concerns about Japan’s fiscal health are growing, especially after Prime Minister Takaichi’s administration recently detailed a \u00a515 trillion stimulus package aimed at boosting domestic consumption. This new government spending is likely to keep pressure on the Yen.<\/p>\n
On the Australian side, the hawkish stance from the Reserve Bank of Australia is providing solid support. Last week’s jobs report showed the unemployment rate unexpectedly dropping to 3.6%, reinforcing the narrative that the central bank must maintain a tightening bias. This data confirms the persistent economic strength we have seen building over the past several months.<\/p>\n
We remember the sharp moves in this pair during the second half of 2025 when carry trade demand surged, and the current setup feels similar. That period saw the AUD\/JPY rally over 8% as the interest rate differential widened significantly. With the Bank of Japan reaffirming its commitment to loose policy just last month, the conditions for a profitable carry trade are once again in place.<\/p>\n
Given this bullish outlook, traders should consider buying call options with a strike price at or above the 110.60 resistance level. This strategy allows for capturing potential upside while defining the maximum risk if the upcoming Australian CPI data disappoints expectations. An expiration date in late March or April would provide enough time for the trend to develop.<\/p>\n
For a more conservative approach, a bull call spread could be implemented to lower the upfront cost. One might buy a call option at the 109.50 level and simultaneously sell a call option at the 111.00 level. This would cap the potential profit but offers a more favorable risk-reward ratio, protecting against any short-term pullbacks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/JPY climbs near 109.60 as yen fiscal worries persist; traders await Australian CPI, RBA bias supports.<\/p>\n","protected":false},"author":62,"featured_media":17048,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42668","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42668","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=42668"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42668\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17048"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=42668"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=42668"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=42668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}