AUD/JPY Price Forecast: Softens below 112.50 as near-term bearish bias persists below 100-day SMA

The AUD/JPY currency pair currently trades near 112.35 in negative territory during the early European session on Thursday. Traders are closely monitoring the Japanese Yen (JPY) and the Australian Dollar (AUD) as authorities may intervene in the currency markets. Reserve Bank of Australia (RBA) Governor Michele Bullock is set to speak later on Friday, which may provide further insights into the currency market.

Goldman Sachs Research strategist Karen Fishman notes that the Japanese Yen's gains are diminishing as authorities' intervention appears "not a sustainable fix... ultimately just buys some time." Meanwhile, the Bank of Japan (BoJ) expressed growing concerns about accelerating inflation during its July meeting summary, with one board member suggesting that interest rate hikes could become more frequent.

A potential additional interest rate hike may be considered at the Bank of Japan's next September policy meeting, following the June hike, in response to rising inflation risks. The unique nature of this currency support measure is highlighted by DBS Group Research, as coordinated FX intervention between the US and Japan is rare, with the last joint intervention occurring 15 years ago.

This current situation stands in sharp contrast to past instances, as policymakers are now deploying uncommon tools to address pronounced Yen weakness rather than strength. In the daily chart, the AUD/JPY pair is experiencing a bearish near-term bias as it dips under the 20-period simple moving average and remains below the 100-day simple moving average.

The price is still above the lower band of the Bollinger Bands, meaning the broader uptrend remains intact, but the Relative Strength Index (14) has turned neutral-to-soft, indicating a potential slowdown in momentum after the recent rally stalled near the upper band zone. The nearest resistance level is at the middle of the Bollinger Bands 20-period SMA around 112.70, followed by the 100-day SMA at 112.90.

Breaking above these levels would be necessary to reopen the path toward the July 16 high of 113.88, leading to the upper Bollinger band near 115.45. On the downside, the primary support is at the August 10 low of 111.63, with the next contention level at the August 7 low of 110.77. A decisive move below the Bollinger lower band at 110.00 could signal a deeper corrective phase within the broader trend.