The Australian dollar is sustaining its bullish advance against the Japanese yen, holding above the 100-day simple moving average and trading near multi-decade highs as monetary policy divergence between the Reserve Bank of Australia and the Bank of Japan continues to drive the pair higher.
In recent sessions, AUD/JPY has found support on dips, with buyers defending the upward bias. The 100-day SMA, located around 113.80, remains a key technical level for trend confirmation. Momentum indicators such as the Relative Strength Index remain in bullish territory without reaching overbought conditions, leaving room for further upside. Immediate resistance is seen near 115.00, a psychological level, followed by the recent swing high. A break below the 100-day SMA would expose the 200-day SMA as the next significant support.
The fundamental backdrop centers on policy divergence. The Reserve Bank of Australia has signaled potential further tightening to combat inflation, while the Bank of Japan remains committed to negative interest rates and yield curve control. This widening interest rate differential makes the Australian dollar more attractive to yield-seeking investors. Robust commodity prices, particularly iron ore and coal, have also supported Australia's terms of trade, while Japan's sluggish growth and persistent deflationary pressures have kept the yen weak across the board.
Traders are also monitoring intervention risk from Japanese authorities, as a sharply weaker yen has previously prompted verbal warnings and direct market action. Potential trend reversals could come from a surprise Bank of Japan policy pivot, falling commodity prices, or a broader shift in global risk appetite.
