Insights 
VT 
AUD/JPY reached around 98.85 during the early European session, maintaining a bullish outlook. The next resistance is at 99.50, with a short-term downside target at 97.84.
Momentum for AUD/JPY is supported by an RSI of 55.0, suggesting an upward trend. If it surpasses 99.50, the cross could aim for 100.00 and 100.40.
Bank Of Japan’s Influence
Support lies at 97.84, with a drop potentially leading to 96.86 and 96.65. The Japanese Yen’s value is influenced by the Bank of Japan’s policies and the differential between Japanese and US bonds.
The BoJ has used ultra-loose monetary policy from 2013 to 2024, impacting the Yen’s value against major currencies. Recent policy adjustments have offered some support to the Yen.
Over the past decade, a divergence between BoJ and US Federal Reserve policies widened US and Japanese bond differentials. The BoJ’s 2024 policy shift and other central banks’ rate cuts are closing this gap.
The Japanese Yen is considered a safe-haven currency. In market uncertainties, it tends to strengthen, being viewed as more stable compared to others.
Current Market Drivers
Looking back, the bullish view on AUD/JPY was justified, driven by factors like the old US-China trade discussions. Today, on October 23, 2025, the dynamic is different but the upward trend continues to show resilience. The primary driver has now fully shifted from geopolitical hopes to clear monetary policy divergence.
For the Australian dollar, the situation is defined by stubborn inflation, which clocked in at 3.8% for the third quarter of 2025. This has forced the Reserve Bank of Australia to signal a “higher for longer” stance, keeping the cash rate at 4.35%. This policy provides a strong fundamental support for the Aussie dollar against lower-yielding currencies.
On the other side of the cross, we’ve seen the Bank of Japan’s slow exit from its ultra-loose policy that ended back in 2024. While the BoJ did raise its policy rate to 0.25% in July 2025, this is still significantly lower than its peers. This interest rate differential remains a key factor fueling the carry trade, where traders borrow yen to invest in higher-yielding Aussie assets.
This wide interest rate gap means traders are essentially paid to hold long AUD/JPY positions. We see this reflected in the derivatives market, with a notable demand for call options expiring in the next one to three months. Buying call options allows traders to capitalize on further upside while defining their maximum risk to the premium paid.
However, we must watch for any signs of a global risk-off sentiment, as this historically strengthens the safe-haven yen. Recent concerns over slowing European growth have caused some short-term volatility. Traders should consider using put options below key support levels as a hedge against a sudden downturn in market mood.
The pair is currently navigating resistance around the 103.50 level, which it has tested multiple times this month. A sustained break above this could open the path towards the psychological 105.00 mark. Key support now sits at the 50-day moving average near 102.20, a level that must hold to maintain the current bullish structure.
