The AUD/JPY pair maintained its upward momentum on Wednesday, trading around 100.05 during the early European session. The Japanese yen (JPY) remained under pressure against the Australian dollar (AUD) as investors evaluated the policy outlook under Japan’s new Prime Minister, Sanae Takaichi.
BoJ rate hike expectations fade under Takaichi leadership
Following Takaichi’s leadership victory, markets have scaled back expectations for a Bank of Japan (BoJ) rate hike in October. The new prime minister has signaled a cautious approach toward monetary tightening and emphasized the importance of coordination between the government and the central bank. According to Bloomberg, money market traders now assign a 26% probability of a BoJ rate increase at the October 30 meeting, down sharply from around 60% before Takaichi’s win.
Technical outlook: uptrend intact but overbought signals emerge
From a technical standpoint, AUD/JPY continues to trade with a bullish bias, supported above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) stands at 74.25—well into overbought territory—suggesting that the pair may face consolidation or a short-term correction before any further gains.
On the upside, immediate resistance is seen at 101.56, the November 20, 2024 high, followed by 102.30 and 103.48. A break above the latter could open the door to a renewed rally toward multi-month highs.
On the downside, initial support lies at 99.16, the October 7 low. A drop below this level could expose 98.35 (the September 15 high), with stronger support near 96.45–96.30, aligning with the 100-day EMA and the lower Bollinger Band boundary.
