The AUD/JPY softens around 100.50 during Tuesday’s early European trading session. Despite this dip, a positive outlook persists, supported by a bullish RSI indicator. Immediate resistance is expected at 101.65 with a crucial downside target near 100.00. The Australian Dollar faces weakness against the Japanese Yen after the Reserve Bank of Australia kept the Official Cash Rate unchanged at 3.6%, following higher-than-expected inflation figures from the September quarter.

Technically, AUD/JPY remains stable, supported above the 100-day Exponential Moving Average on the daily chart. The 14-day Relative Strength Index indicates bullish momentum at 61.65. The first upside barrier emerges at 101.65; a breakthrough could lead to 102.30, with the next target being 103.12. Alternatively, the 100.00 level serves as the main support; falling below may lead to a retreat toward 99.74, then 97.84.

Factors Influencing The Australian Dollar

Interest rates set by the Reserve Bank of Australia and factors like Iron Ore prices and Chinese economic health influence the Australian Dollar. Decisions affecting interest rates, and events in China, have direct effects on the currency’s value. The price of Iron Ore and Australia’s Trade Balance also impact the Australian Dollar, with fluctuations reflecting in demand for the AUD.

With the Reserve Bank of Australia holding rates steady at 3.6%, we see the AUD/JPY cross consolidating around the 100.50 mark. The technical picture remains bullish, with the price holding firmly above the 100-day exponential moving average. This creates a foundation for considering derivative plays that benefit from either a slow grind higher or a definitive breakout in the coming weeks.

Given the strong support at the 100.00 psychological level, selling cash-secured puts with a strike price just below this mark, perhaps at 99.50, could be an effective strategy. This allows us to collect premium while the bullish structure remains intact. The RBA’s decision to hold rates, rather than cut them as some had feared earlier in 2025, provides a fundamental floor that supports this type of position.

The Impact Of China’s Economic Health And Commodity Prices

Adding to the bullish sentiment is the health of our biggest trading partner, China. Recent data shows China’s Caixin Manufacturing PMI just came in at 50.9, beating market expectations and indicating a slight expansion in the manufacturing sector. This positive surprise suggests sustained demand for Australian resources, which is a direct positive for the Aussie dollar.

We are also seeing stability in key commodity prices, with iron ore futures consolidating near the $120 per tonne mark. This is a significant improvement from the sub-$100 levels we saw during a brief dip back in late 2024. This price stability provides a strong underpinning for Australia’s trade balance and, by extension, the AUD.

For traders anticipating a move through the immediate resistance at 101.65, buying call options is a more direct bullish play. A break above this level could see the pair move quickly towards the November 2024 high of 102.30. A bull call spread, buying a 101.50 call and selling a 102.50 call, would be a cost-effective way to target this specific move while defining risk.

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