AUD/JPY Builds Momentum Near 110.72, Bulls Eye Further Upside

Traders' Opinions

Summary:

AUD/JPY trades around 110.72 during the Asian session, maintaining a bullish outlook supported by a hawkish RBA, which recently hiked rates to 3.85%, and Australia's solid GDP growth of 0.8% in Q4 2025.

BUY AUDJPY

EXP

TRADING

110.798

Entry Price

113.500

109.900

110.866 +0.490 +0.44%

0.0

Pips

Flat

109.900

Exit Price

110.798

Entry Price

113.500

AUD/JPY trades with a subdued tone around 110.72 during Thursday's Asian session, consolidating after posting mild gains in the previous session. The currency cross faces renewed selling pressure as diverging central bank signals and a broadly stronger Japanese Yen weigh on sentiment.

Australia's economy rose 0.8% in seasonally adjusted chain volume measures in the December quarter of 2025, while in nominal terms GDP expanded 1.8%. While the headline figure broadly met expectations, the current account balance deteriorated to a deficit of $22.1 billion, the largest in a decade, with net trade set to subtract 0.1 percentage points from quarterly GDP growth.The mixed nature of the data provided little fresh impetus for the Australian Dollar.

On the monetary policy front, the Reserve Bank of Australia raised its cash rate target by 25 basis points to 3.85% Reserve Bank of Australia at its February 2026 meeting, marking a hawkish pivot after a period of easing. The RBA's February Statement on Monetary Policy cited uncertainty about whether the rate is now at a restrictive level, noting that the Australian economy will pick up in the short term due to stronger private spending, though GDP growth is expected to decline from late 2026 onwards.While the rate hike lends the AUD some fundamental support, the gains are being capped by a resurgent Yen.

Over the last 30 days, AUD/JPY moved between 107.81 and 111.72, with an average of 109.59 and 0.65% volatility, reflecting how sensitive the cross has become to shifting rate expectations on both sides.

The Japanese Yen is drawing strength from the Bank of Japan's ongoing normalization path. BoJ board member Hajime Takata, in a February speech, argued for further gradual rate hikes guided by overseas developments and a broad range of domestic data, calling the current moment a "true dawn" as the central bank shifts gears away from large-scale easing.Separately, the IMF expects two more BoJ hikes this year and another in 2027, and welcomed Japan's commitment to a flexible exchange rate, saying it would help absorb external shocks and maintain price stability.

BoJ Governor Kazuo Ueda acknowledged that volatility remains high and that the bank would scrutinise developments carefully, reinforcing market expectations that policy normalization remains on track but will proceed cautiously. ING analysts currently expect the BoJ's next rate hike to emerge in October 2026, though if the yen weakens and continues to drive up import prices, the timeline could be moved forward to the second quarter of 2026.

The broader risk backdrop also plays a role. US tariff pressures have hit Australian exports, with shipments to the United States falling 10.5% as newly imposed tariffs bit into trade flows, and shipments to South Korea, India, and Japan also declining. This adds to concerns over Australia's external sector resilience, limiting the AUD's upside potential.

Technical Analysis

From a technical perspective, AUD/JPY remains positioned within a broader bullish structure, supported by a well-defined ascending trendline that has guided price action higher since late January. On the 4-hour chart, the pair continues to trade above this rising trendline, signaling that the underlying upward momentum remains intact despite the recent period of consolidation near the highs.

Following a sharp advance from the 108.82 region (100% Fibonacci retracement), price action accelerated toward the 0.00% Fibonacci level near 111.87, which currently represents the most immediate resistance zone. The pair briefly tested this level but encountered selling pressure, triggering a pullback that has since transitioned into a consolidation phase just above key retracement levels. This pause appears to be a healthy correction within the broader uptrend rather than the beginning of a deeper reversal.

The recent pullback found buyers emerging near the 45% Fibonacci retracement at 110.50, with additional support around the 50% retracement level at 110.34. This area aligns with a previously established demand zone, highlighted by the grey support region on the chart, reinforcing its importance as a structural floor for the ongoing trend. The ability of price to repeatedly rebound from this region underscores the presence of strong underlying demand.

A deeper layer of support lies near the 61.8% Fibonacci retracement at 109.98, which coincides with the lower boundary of the demand zone. This level represents a critical pivot for the broader bullish structure. A decisive break below this region would likely undermine the current trend dynamics and expose the 78.6% Fibonacci retracement near 109.49, followed by the 108.82 level, which marks the full retracement of the prior impulsive move. Such a scenario would suggest a broader corrective phase rather than a continuation of the prevailing uptrend.

On the upside, bullish traders remain focused on a sustained break above the 111.87 resistance level, which represents the 0% Fibonacci retracement and the most recent swing high. A clear breakout above this barrier would confirm renewed bullish momentum and likely open the path toward the 112.70 region (-27% Fibonacci extension). Beyond that, the next major upside objective lies near 113.53 (-54% Fibonacci extension), which aligns with the projected continuation move indicated by the chart’s measured expansion.

Price structure also supports the bullish outlook. The series of higher lows formed along the ascending trendline, combined with the consolidation above the mid-Fibonacci support cluster, suggests that the market is building momentum for another potential leg higher. The corrective move from recent highs has also allowed the market to absorb prior gains while maintaining the integrity of the broader trend.

Overall, as long as AUD/JPY holds above the 109.98–110.34 support cluster and the rising trendline, the technical outlook continues to favor a bullish continuation following the current consolidation phase.

TRADE RECOMMENDATION

BUY AUD/JPY

ENTRY PRICE: 110.80

STOP LOSS: 109.90

TAKE PROFIT: 113.50

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data

AUD/JPY Builds Momentum Near 110.72, Bulls Eye Further Upside

Technical Analysis

Risk Disclosure