AUD\/JPY fell to about 109.05 in early European trading on Monday, as trade war fears, Middle East tensions and general uncertainty supported the Japanese Yen. The move kept the cross near 109.00, with the Yen gaining from demand for safer currencies.<\/p>\n
Losses in the Australian Dollar were limited by expectations of a firm Reserve Bank of Australia stance. Stronger-than-expected Australian data has reinforced views that the RBA may keep a tightening bias to tackle persistent inflation.<\/p>\n
On the daily chart, AUD\/JPY remains above the 100-day EMA, with the 100-day EMA at 104.35. Price is just above the 20-day middle Bollinger Band, and wide bands point to high volatility.<\/p>\n
The RSI is 56.29, indicating neutral momentum after cooling from earlier overbought levels. Support is at 108.82, with a lower level at 106.98.<\/p>\n
Resistance is at 110.65, the upper Bollinger Band. A daily close above 110.65 could open further gains.<\/p>\n
The Yen is influenced by Japan\u2019s economic performance, Bank of Japan policy, bond yield spreads and market risk appetite. The BoJ\u2019s ultra-loose policy from 2013 to 2024 weakened the Yen, while 2024 policy changes have offered some support.<\/p>\n
The AUD\/JPY cross is currently experiencing a pullback near the 109.00 level, creating a point of tension for our strategies. While the broader trend remains bullish, recent safe-haven demand for the Yen, fueled by renewed US-China trade friction over technology tariffs, is causing this short-term dip. We see this as a test of the underlying strength in the Australian dollar.<\/p>\n
The case for a stronger AUD remains compelling, suggesting we should look at buying on this weakness. The Reserve Bank of Australia is holding firm with its hawkish stance, supported by the last official data from Q4 2025 which showed annual inflation at 3.9%, still well above their target. With unemployment also holding at a low 3.7%, the RBA has little reason to cut its 4.85% cash rate, keeping yield-seekers interested in the Aussie.<\/p>\n
However, we must respect the growing demand for the Japanese Yen as a safe haven. Global risk sentiment has soured, with the VIX volatility index climbing from 14 to 18 over the last two weeks, and this benefits the JPY. For traders, this implies that holding long AUD\/JPY positions requires protection, making put options with strikes below the 108.82 support level a prudent hedging strategy against further geopolitical shocks.<\/p>\n
The evolving policy of the Bank of Japan is a critical factor we are watching. Since the BoJ officially ended its negative interest rate policy back in late 2024, the slow unwind of its ultra-loose stance has provided a floor for the Yen. This gradual normalization, even if slow, is starting to narrow the extreme interest rate differential that has favored the AUD for so long.<\/p>\n
Given the elevated volatility indicated by the wide Bollinger Bands, option premiums are currently expensive. This suggests that instead of simply buying options, we should consider strategies like bull call spreads to target a move towards the 110.65 resistance, which would cap potential gains but significantly lower the upfront cost. The key is to manage the high cost of volatility while positioning for the intact, longer-term uptrend to resume.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/JPY dips near 109.05 as safe-haven Yen gains; Aussie steadied by firm RBA expectations, volatility elevated.<\/p>\n","protected":false},"author":62,"featured_media":17042,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42527","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-ca\/wp-json\/wp\/v2\/posts\/42527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42527"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42527\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17042"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}