Insights 
VT 
AUD/JPY maintained a stable position around 98.50 during Wednesday’s early European session. While the pair retains a positive outlook, an overbought RSI may restrict gains, with initial resistance emerging at 99.50.
The trading cross is affected by US-China trade tensions and ongoing geopolitical events, which may support the Japanese Yen as a safe-haven currency. The daily chart shows AUD/JPY well above its 100-day EMA, despite the 14-day RSI suggesting neutral momentum, potentially leading to consolidation or a temporary sell-off.
Key Resistance And Support Levels
Key resistance is anticipated between 100.95 and 101.00, with support identified at 97.84 and 96.86. A breakthrough above 100.00 could lead to gains towards 100.35, while a drop below 96.25 might indicate a further downtrend.
The Japanese Yen is influenced by the Bank of Japan’s policies, bond yield differentials, and global risk sentiment. The BoJ’s approach often leads to Yen depreciation, but recent shifts in policy and global rate changes have lent some support. Historically, Yen serves as a safe-haven asset, appreciating during market uncertainties due to its perceived stability.
We are currently observing the AUD/JPY cross holding steady around the 98.50 mark. Although the broader trend appears bullish, the neutral RSI reading suggests that immediate upward momentum is fading. This points to a period of consolidation, so we should be hesitant to enter aggressive long positions at this level.
The latest Australian inflation data for Q3 2025, which came in at 3.8%, was slightly below market expectations, reducing the pressure on the Reserve Bank of Australia for another rate hike. This could cap the Australian dollar’s potential gains in the coming weeks. We see this as a key factor limiting a breakout above the 99.50 resistance.
Geopolitical Uncertainty And Strategy
Meanwhile, Japan’s core inflation remains persistent at 2.7%, supporting the view that the Bank of Japan will continue the gradual policy normalization it began back in 2024. The narrowing yield differential between Japanese and US government bonds further underpins the Yen’s strength. This fundamental backdrop creates a significant headwind for the AUD/JPY pair.
Recent announcements from early October 2025 regarding a US review of Chinese trade tariffs have also reintroduced geopolitical uncertainty into the market, increasing demand for the safe-haven Japanese Yen. For derivative traders, this environment of capped upside suggests that selling call spreads above the 100.00 psychological level could be an effective strategy. We believe volatility may increase as these opposing economic forces play out.
Considering these factors, a prudent approach would be to wait for a potential pullback towards the initial support level of 97.84 before considering new bullish positions. Alternatively, buying put options with a strike below 98.00 could offer a low-cost way to hedge against a downturn if key support levels fail to hold. We anticipate the cross will remain in a range rather than begin a new leg up.
