FX.co ★ AUD/JPY. Analysis and Forecast

The AUD/JPY pair began the week with a bullish gap and reached 99.37 — levels last seen in November 2024. The strong intraday rally was driven by heavy selling of the Japanese yen, indicating the potential for further gains in the pair in the near term.

On Saturday, Sanae Takaichi won the second round of the Liberal Democratic Party (LDP) leadership election and is expected to be confirmed as Japan's first female prime minister at the parliamentary session in mid-October. Takaichi is considered a "fiscal dove" and may announce a more expansionary economic policy. This increases the likelihood that the Bank of Japan will not raise rates this month, triggering aggressive yen selling and fueling strong growth in AUD/JPY.

At the same time, hopes for additional stimulus are supporting Japan's Nikkei 225 index, which hit a record high, while further weakening the yen's safe-haven appeal in favor of the riskier Australian dollar.

Another key factor supporting the Australian dollar is the Reserve Bank of Australia's (RBA) hawkish stance, which underpins the short-term positive outlook for AUD/JPY.

At its September monetary policy meeting, the RBA kept the official cash rate (OCR) unchanged at 3.6%. In its accompanying statement, the central bank noted that the decline in core inflation was slowing and pointed to the likelihood of rising inflation in the final quarter. This reduces the probability of additional rate cuts and supports bullish sentiment for the Australian dollar.

Moreover, the breakout above the round level of 99.00 suggests that the path of least resistance for AUD/JPY remains upward.

From a technical perspective, oscillators on the daily chart are positive; however, the Relative Strength Index (RSI) is approaching the overbought zone, indicating the potential for a minor correction or price consolidation.

Having broken through 99.37, the pair is now targeting the psychological level of 100.00. The last support level that could weaken the bulls lies at 98.45. A break below it could push prices down toward the round level of 98.00.

The table shows the percentage changes of the Japanese yen against major currencies, where the yen demonstrated the most strength relative to the euro.