AUD/JPY Forecast: Bullish Momentum Intact Above Crucial 109.00 Support Level

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AUD/JPY Forecast: Bullish Momentum Intact Above Crucial 109.00 Support Level

SYDNEY, Australia – March 2025 – The AUD/JPY currency pair continues demonstrating remarkable resilience above the critical 109.00 support level, maintaining a constructive technical outlook that has captured significant attention among forex traders and institutional analysts. This key cross pair, representing the Australian dollar against the Japanese yen, has navigated recent market volatility with notable stability, offering valuable insights into broader Asia-Pacific currency dynamics and risk sentiment patterns.

AUD/JPY Technical Analysis: Constructive Structure Above 109.00

Technical analysts consistently highlight the 109.00 level as a pivotal support zone for AUD/JPY. This psychological barrier has proven remarkably durable through multiple testing phases since late 2024. The pair’s ability to maintain positions above this threshold suggests underlying strength in the Australian dollar relative to its Japanese counterpart. Furthermore, recent price action reveals a series of higher lows on daily charts, confirming the constructive technical structure that market participants monitor closely.

Several key technical indicators support this optimistic assessment. The 50-day moving average currently provides dynamic support around 109.50, while the 200-day moving average trends upward from 107.80. Additionally, momentum oscillators like the Relative Strength Index (RSI) maintain readings in neutral territory, avoiding overbought conditions that might signal imminent reversal. These technical factors collectively reinforce the constructive outlook that dominates current market analysis.

Critical Support and Resistance Levels

Market technicians identify several crucial price levels that will likely determine AUD/JPY’s trajectory in coming sessions:

• Immediate Support: 109.00-109.20 zone
• Secondary Support: 108.40-108.60 range
• Immediate Resistance: 110.50-110.80 area
• Major Resistance: 111.40-111.70 band

Fundamental Drivers: Economic Context Behind AUD/JPY Movements

The Australian dollar’s performance against the yen reflects complex fundamental interactions between two distinct economies. Australia’s export-oriented economy, heavily dependent on commodity prices, contrasts sharply with Japan’s manufacturing and technology-focused economic structure. Consequently, AUD/JPY often functions as a barometer for global risk appetite and commodity market sentiment. Recent stability in iron ore and copper prices has provided fundamental support for the Australian dollar, while Japan’s persistent accommodative monetary policy continues weighing on yen valuation.

Central bank policy divergence represents another crucial fundamental factor. The Reserve Bank of Australia maintains a relatively hawkish stance compared to the Bank of Japan’s ultra-accommodative position. This policy differential creates natural upward pressure on AUD/JPY as interest rate expectations diverge. Moreover, Japan’s ongoing yield curve control framework limits yen appreciation potential, providing structural support for the cross pair’s constructive technical outlook above 109.00.

Expert Analysis and Market Sentiment

Senior currency strategists at major financial institutions generally maintain cautiously optimistic views on AUD/JPY prospects. According to recent research notes from global banks, the pair’s technical structure suggests continued upside potential provided key support levels hold. Market sentiment indicators show institutional positioning remains net long AUD/JPY, though not at extreme levels that might signal contrarian reversal signals. This balanced positioning supports the constructive outlook while allowing room for additional appreciation.

Seasonal patterns also favor AUD strength during the current period. Historically, the Australian dollar tends to perform well during the Southern Hemisphere autumn months as commodity flows increase. Meanwhile, Japanese fiscal year-end flows typically create yen volatility that often benefits AUD/JPY bulls. These seasonal factors combine with technical and fundamental elements to reinforce the positive assessment of the currency pair’s trajectory.

Risk Factors and Potential Challenges

Despite the constructive technical outlook, several risk factors warrant careful monitoring. Geopolitical tensions in the Asia-Pacific region could trigger safe-haven yen flows that pressure AUD/JPY lower. Additionally, unexpected shifts in Chinese economic policy might impact Australian export prospects, creating volatility for the commodity-linked Australian dollar. Global recession concerns also represent potential headwinds, as risk-off sentiment typically benefits the Japanese yen at the expense of higher-yielding currencies like the Australian dollar.

Technical analysts emphasize that a sustained break below 109.00 would invalidate the current constructive outlook. Such a development would likely trigger stop-loss orders and prompt reassessment of bullish positions. Conversely, a decisive move above 110.80 resistance would confirm renewed upward momentum and potentially target the 2024 highs near 111.70. Market participants should monitor these technical levels alongside fundamental developments for comprehensive risk assessment.

Trading Volume and Liquidity Considerations

AUD/JPY trading volume has increased steadily throughout 2025, reflecting growing institutional interest in Asia-Pacific currency crosses. The pair typically experiences peak liquidity during Asian and European overlapping sessions, with reduced activity during North American hours. This liquidity pattern creates optimal trading conditions for participants in Asian and European time zones. Moreover, the pair’s correlation with equity markets has strengthened recently, making AUD/JPY an increasingly popular proxy for broader risk sentiment trades.

Historical Context and Long-Term Perspective

The AUD/JPY pair has navigated significant volatility over the past decade, ranging from lows near 55.00 during the 2008 financial crisis to peaks above 100.00 in subsequent years. The current trading range above 109.00 represents historically elevated levels that reflect structural shifts in both economies. Australia’s deepening trade relationships across Asia have strengthened fundamental support for its currency, while Japan’s demographic challenges continue weighing on long-term yen prospects. This historical context helps explain the pair’s resilience and constructive technical structure.

Long-term charts reveal that AUD/JPY has established a broad consolidation pattern between 100.00 and 115.00 since 2022. The current price action near the upper portion of this range suggests potential for eventual breakout, though such development would require significant fundamental catalysts. Technical analysts note that the pair has spent increasing time above its long-term moving averages, indicating underlying strength that supports the constructive outlook maintained by most market observers.

Conclusion

The AUD/JPY forecast maintains a constructive outlook above the crucial 109.00 support level, supported by technical, fundamental, and sentiment factors. The pair’s resilience reflects Australia’s economic strengths and Japan’s persistent monetary accommodation. While risk factors warrant monitoring, the technical structure suggests continued potential for appreciation toward resistance zones near 110.80 and potentially 111.70. Market participants should watch key support at 109.00 for any signs of breakdown that might alter the current positive assessment. Ultimately, the AUD/JPY currency pair remains well-positioned within its broader historical context, offering valuable insights into Asia-Pacific currency dynamics and global risk sentiment patterns.

FAQs

Q1: What makes the 109.00 level so important for AUD/JPY?
The 109.00 level represents a major psychological and technical support zone that has proven durable through multiple tests. It functions as a confluence area where several moving averages and historical price action create significant market memory.

Q2: How does commodity pricing affect AUD/JPY movements?
Australia’s economy depends heavily on commodity exports, particularly iron ore and copper. Consequently, AUD/JPY often correlates with commodity price trends, rising when raw material prices strengthen and declining during commodity market weakness.

Q3: Why does Bank of Japan policy impact this currency pair?
The Bank of Japan maintains ultra-accommodative monetary policy including yield curve control. This policy divergence with the Reserve Bank of Australia creates structural support for AUD/JPY as interest rate differentials favor the Australian dollar.

Q4: What time of day offers best liquidity for trading AUD/JPY?
AUD/JPY typically experiences peak liquidity during Asian and European session overlap (approximately 00:00-08:00 GMT). Trading volume decreases during North American hours when both Australian and Japanese markets are closed.

Q5: How does global risk sentiment influence AUD/JPY price action?
AUD/JPY functions as a risk sentiment barometer, with the Australian dollar considered a risk currency and the Japanese yen viewed as a safe haven. The pair generally rises during risk-on market environments and declines during risk-off periods.

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