Australian dollar to Japanese yen rate steadies after RBA official flags inflation risk: AUD/JPY consolidates

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Australian Dollar vs Yen drops 0.84%

Highlights

The Reserve Bank of Australia Deputy Governor stated that inflation risks have increased, creating uncertainty about a possible November rate hike.
Hawkish comments from officials have increased expectations of policy tightening, affecting demand for the Australian dollar versus the yen.
AUD/JPY trades below key moving averages with momentum signals bearish; the expected two to three day range is ¥109.76 to ¥110.86 with downside risk prevailing.

Policy tightening bets grow as RBA flags worsening inflation outlook

On Wednesday, the Reserve Bank of Australia Deputy Governor stated that the inflation outlook had worsened, introducing new uncertainty about whether another interest rate increase might be warranted in November, according to Economies. Such hawkish remarks from an official tend to raise expectations for further policy tightening, which could increase the yield appeal of the Australian dollar versus its peers. The resulting speculation has affected sentiment around the Australian dollar against the Japanese yen during the current period.

Multi-horizon sell signals deepen as momentum remains weak

AUD/JPY sits below its 20-, 50-, and 200-period moving averages, showing clear downward signaling across all trend horizons. The Ichimoku Kijun level at ¥110.9 is acting as immediate resistance. Momentum remains soft, with MACD in a neutral state and ADX still signaling a sell bias. Both RSI and CCI confirm oversold conditions, while Stochastic RSI stays neutral. Intraday, bearish pressure prevails as negative values in Bull/Bear Power and the Awesome Oscillator further reinforce the downside momentum, with oscillators providing a consistent signal of little potential for reversal.

Limited upside seen as bearish consolidation likely without breakout

Over the next two to three trading days, AUD/JPY is expected to fluctuate within a typical volatility range of ¥109.76 to ¥110.86. The likelihood of any substantial upward move appears very low; conversely, the probability of continued weakness is high, making a reversal improbable without a clear break above resistance. The baseline scenario sees the pair consolidating within this corridor, while any bullish shift would require a decisive break above the Ichimoku Kijun at ¥110.9. A move below ¥109.76 would indicate renewed downside pressure.

Anton Kharitonov, expert at Traders Union, notes that AUD/JPY remains under technical pressure, with price action below all key moving averages and momentum indicators showing persistent weakness. He points out that hawkish signals from the Reserve Bank of Australia have not reversed this technical bias or generated enough demand to overcome resistance at ¥110.9. Kharitonov believes that, unless a clear breakout above resistance occurs, the pair is likely to consolidate to the downside. "My view is defensive: as long as AUD/JPY trades under ¥110.9, the risk of further weakness dominates and aggressive longs are not justified."

Earlier, analysts noted that AUD/JPY remained under bearish technical pressure following weaker Australian employment data, with expectations of continued downside and consolidation. The latest period strengthens this view as the pair stays below major technical markers despite renewed policy uncertainty, making the ¥110.9 resistance pivotal for any potential bullish shift in the days ahead.

Source of Data: AUD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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