The AUD/JPY pair remains firm around 100.35 in early European trading on Friday, as political developments in Japan weigh on the Yen. The election of Sanae Takaichi as the new leader of Japan’s ruling party has sparked concerns about potential fiscal expansion, prompting traders to scale back expectations for a Bank of Japan (BoJ) rate hike this month. This sentiment keeps the Japanese Yen (JPY) under pressure against the Australian Dollar (AUD).
Verbal intervention may limit yen losses
Comments from Japan’s Finance Minister Kato earlier on Friday offered some verbal support to the Yen, which could help limit near-term downside pressure. However, the broader tone remains cautious, with traders closely monitoring any follow-up policy signals from Japanese authorities.
Technical outlook remains bullish, but overbought RSI flags risk of correction
From a technical perspective, AUD/JPY maintains a bullish bias while staying above the key 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) hovers near 73.65—well above the neutral 50 mark—indicating overbought conditions. This suggests the potential for a short-term pullback or consolidation phase before the next upward leg.
On the upside, immediate resistance lies in the 100.95–101.00 zone, which coincides with the October 9 high and a key psychological level. A break above this range could open the door to 102.30 (November 8, 2024 high), followed by 103.48 (April 26, 2024 high).
On the downside, initial support sits at 99.16 (October 7 low), followed by 98.35 (September 15 high). A decisive move below these levels could expose the 100-day EMA near 96.50, undermining the pair’s short-term bullish structure.
