The AUD/JPY currency pair advanced to approximately 114.05 during the early European session on Wednesday, with the Australian Dollar strengthening against the Japanese Yen. This move was attributed to a hawkish tone from the Reserve Bank of Australia (RBA), which has supported the AUD's upward trajectory against the JPY [1]. Technical analysis indicates that AUD/JPY maintains a clear bullish bias, trading well above both the 20-day simple moving average from the Bollinger Bands and the 100-day exponential moving average, reinforcing the broader uptrend. The Relative Strength Index (RSI) stands at 68.62, just below overbought territory, suggesting robust but potentially stretched upside momentum [1].
Immediate resistance is identified at the upper Bollinger Band at 115.35, where profit-taking by buyers could occur if momentum wanes. On the downside, initial support is seen at the Bollinger middle band near 111.90, with further support at the 100-day EMA at 108.55 and the lower Bollinger Band at 108.45, which are expected to act as a firm medium-term floor as long as the bullish structure remains intact [1].
Geopolitical developments are also in focus, as US President Donald Trump announced an extension of the ceasefire with Iran at Pakistan's request, pending a 'unified proposal' from Tehran. The US military continues to blockade Iranian ports. Market participants are closely monitoring US-Iran peace talks, as any escalation or prolonged conflict could boost demand for safe-haven currencies like the JPY and potentially create headwinds for the AUD/JPY cross [1].
CONCLUSION
AUD/JPY's bullish momentum is underpinned by a hawkish RBA and favorable technical signals, with the pair trading above key moving averages. However, geopolitical risks in the Middle East could shift sentiment and support the JPY if tensions escalate. Traders are advised to monitor both technical levels and geopolitical developments for further direction.