AUD/JPY Price Forecast: Strengthens above 110.00, but remains bearish below 100-day SMA

The AUD/JPY exchange rate currently trades around 110.30, marking a brief respite from a recent two-day decline in the early European trading session. The Australian Dollar (AUD) has been supported by cautious comments from Japanese policymakers, particularly those made by Bank of Japan Governor Kazuo Ueda and Vice Governor Ayano Sato.

Ueda's remarks, which signaled a more measured approach to future interest rate hikes, and Sato's endorsement of a gradual rate increase, have weighed on the Japanese Yen. This has contributed to a nearly 12% probability of a rate hike in the current month, down from a peak of 40% early last week, according to Bloomberg. The technical analysis suggests that the AUD/JPY pair is in a bearish short-term trend, with the price currently trading below the 100-day Simple Moving Average (SMA) and the Bollinger Bands' 20-day middle SMA.

To move higher, the pair would need to break above the 110.55 Bollinger middle band, which could potentially lead to a significant gain to the July 27 high of 114.67. Conversely, a break below the 110.00 psychological level could trigger a decline towards the lower Bollinger Band at 109.00 and then the October 1 low of 108.71. The Bank of Japan's cautious stance, coupled with the US Dollar's weakness and hawkish expectations from the Reserve Bank of Australia (RBA), has provided some support for the AUD/JPY pair.