AUD/JPY Price Forecast: Holds gains above 110.50, but maintains bearish bias below 100-day SMA

The AUD/JPY currency pair remains strong in the 110.50 range during early European trading on Wednesday. The Japanese Yen is weakening due to rising energy costs stemming from the ongoing Middle East conflict, which increases Japan's import expenses. The Bank of Japan (BoJ) is anticipated to raise interest rates by 25 basis points at its upcoming meeting on Friday, bringing the borrowing costs to their highest level since April 1995.

OCBC Group Research analysts predict three additional 25-basis-point hikes in 2027, contingent on the BoJ maintaining its hawkish stance following the September hike. Traders will closely watch BoJ Governor Kazuo Ueda's speech for clues on future rate hikes, as hawkish comments could support the Yen and hinder the AUD/JPY pair in the short term.

Standard Chartered analysts anticipate a 25-basis-point increase to 1.25% during the BoJ meeting on September 17-18, while acknowledging the economy can likely handle another modest hike. Intraday, AUD/JPY exhibits bearish technical indicators, trading below the 100-day Simple Moving Average and the Bollinger middle band. The pair is situated within the lower half of the Bollinger envelope and the RSI is at 36.04, showcasing persistent downside pressure.

Resistance looms at the August 10 low of 112.45, with the Bollinger middle band near 112.60. A breakthrough above this level could propel the pair to the 100-day SMA at 112.95 and the upper Bollinger band at 115.90. Conversely, the 100.00 psychological level serves as the primary support, with further downside potential at the lower Bollinger band around 109.25, the March 31 low of 108.79, and the February 16 low of 107.73.