AUD/JPY 110.60: Yen Strength Puts the M15 Rebound Under Pressure

Forex

Summary:

AUD/JPY is trading around the 110 area after a sharp decline from the September highs, with recent technical analysis identifying 109.70 as downside support and 111.63 as immediate resistance. ...

SELL AUDJPY

EXP

TRADING

110.600

Entry Price

110.000

111.150

110.506 -0.085 -0.08%

0.0

Pips

Flat

110.000

Exit Price

110.600

Entry Price

111.150

Overview

AUD/JPY has undergone a significant reversal from the elevated levels seen earlier in September. Current market analysis places the pair near 110, with 109.70 identified as the first downside target and 111.63 as immediate resistance. This makes 110.60 an interesting tactical level because it sits between current support and resistance, allowing the SELL to target another test of the 110.00 psychological level and potentially the 109.70 structure.

The fundamental backdrop has also shifted against AUD/JPY. The yen has recently staged one of its strongest rallies in months, driven by expectations of a more aggressive BOJ tightening cycle. Markets currently see around an 80% probability of a BOJ hike this week, while the Fed is also expected to raise rates. The important point for AUD/JPY is that even if the Fed tightens, Japanese policy expectations are moving in the same direction, reducing the previous carry advantage that had supported the yen-cross higher.

At the same time, the Australian dollar has started losing its broader momentum. Reuters reports that AUD has recently come under pressure from a stronger U.S. dollar, higher Treasury yields and increased global risk aversion linked to energy and inflation concerns. Because AUD/JPY is highly sensitive to global risk appetite, this combination creates an additional downside pressure beyond the Japan-specific catalyst.

Market Sentiment

Sentiment is increasingly unfavorable for high-beta AUD exposure. The Australian dollar had rallied more than 5% against USD from late June into early September, but recent price action has begun to reverse that trend, with AUD breaking below its 10-day and 20-day moving averages. Reuters also highlights an approaching Ichimoku cloud twist on the daily chart, reinforcing the possibility that the previous AUD uptrend is transitioning into a corrective phase.

For AUD/JPY specifically, the yen side is becoming more important. The yen has strengthened sharply on expectations that the BOJ could raise rates to 1.25%, with policymakers increasingly concerned about inflation. The market is therefore no longer treating JPY as simply a low-yielding funding currency. If the BOJ delivers the expected hike and maintains a tightening bias, AUD/JPY could face another wave of selling.

There is nevertheless an important technical risk: AUD/JPY has already approached the 110 area, where buyers have previously appeared. Recent analysis noted that the 200-day EMA around 110 was attracting buyers and that Stochastic had entered oversold territory. Therefore, selling at 110.60 works best if price first rebounds into the entry and then fails, rather than entering after another sharp downward candle.

Technical Analysis

AUD/JPY 110.60: Yen Strength Puts the M15 Rebound Under Pressure_1

On M15, 110.60 is best treated as a resistance-retest level. The broader structure has shifted bearish, but the pair is close enough to the 110.00–109.70 support area that downside momentum can temporarily stall. The preferred setup is an M15 rejection around 110.60 followed by a lower high.

With Bollinger Bands (20,0,2), the recent decline has pushed price toward the lower portion of the band structure. This makes immediate selling at the lows less attractive. A corrective move back toward 110.60 would allow price to approach the middle Bollinger area before sellers attempt another expansion toward the lower band.

For Ichimoku (9,26,52), the bearish configuration requires price to remain below the Kijun-sen, with the cloud acting as overhead resistance. A failed M15 recovery around 110.60 while Tenkan remains below Kijun would strengthen the continuation signal. The broader yen rally also provides fundamental confirmation for this structure.

The Stochastic (5,3,3) is the main timing filter. Because AUD/JPY has already sold off substantially, Stochastic may be oversold. The cleaner SELL signal would therefore occur if the oscillator rebounds from oversold and then crosses downward again as price tests 110.60. This would show that the bounce is losing momentum rather than simply assuming that oversold conditions will continue indefinitely.

The first objective is 110.00, followed by the stronger 109.70 support. A decisive M15 close below 109.70 would open room toward the 109.00 area. Conversely, sustained acceptance above 111.00–111.20 would weaken the immediate bearish structure, while a break of the 111.63 resistance identified by current technical analysis would invalidate the short-term rejection thesis.

Trade Recommendation

Entry: 110.60

Take Profit: 110.00

Stop Loss: 111.15

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