FX.co ★ Wiking | AUD/JPY

AUD/JPY opened the new week with a positive tone, climbing back above 113.00 as improving global sentiment reduced demand for traditional safe-haven assets. Reports suggesting that the United States and Iran have moved closer to a formal peace agreement helped calm geopolitical concerns and supported risk-sensitive currencies, including the Australian Dollar. While the fundamental backdrop has improved, traders remain cautious ahead of the Reserve Bank of Australia and Bank of Japan policy meetings, which could become the next major catalyst for the pair. Buyers Defend a Critical Technical Zone The daily chart shows that AUD/JPY recently experienced a notable correction after failing to sustain gains near the 114.80 region. Selling pressure accelerated during the first half of June and pushed the pair toward the 112.20 area. However, this decline found strong demand exactly where technical traders would expect buyers to reappear. The lower Bollinger Band and the rising 100-day Simple Moving Average converged around the same zone, creating a powerful support cluster. The latest bullish candles suggest that market participants viewed the pullback as a buying opportunity rather than the beginning of a larger trend reversal. This reaction reinforces the view that the broader uptrend remains intact despite the recent weakness. Indicator Structure Suggests Stabilization Momentum indicators are beginning to reflect improving market conditions. The Relative Strength Index has recovered toward the neutral 50 level after previously drifting lower during the selloff. Rather than signaling bearish dominance, the indicator now points to a more balanced market structure with room for either side to take control. At the same time, the MACD remains below its recent highs, confirming that upside momentum has cooled compared with the strong rally seen during April and May. However, bearish momentum is no longer accelerating. The histogram continues to contract, while the stochastic oscillator has turned sharply higher from oversold territory, often an early sign that buyers are regaining confidence. Resistance Levels Now Come Into Focus For bulls, the next challenge sits near 113.60, which aligns closely with the Bollinger Band middle line. This level is particularly important because it acted as a dynamic support area during the previous advance and is now functioning as resistance after the recent decline. A sustained break above 113.60 would strengthen the recovery narrative and expose the next upside target around 114.15. Beyond that, attention would shift toward the recent swing high near 114.80 and the upper Bollinger Band around 114.90. A move through those barriers would confirm that buyers have fully regained control and that the larger uptrend is resuming. Support Remains the Foundation of the Bullish Case While the rebound is encouraging, the bullish outlook remains dependent on support holding. The area between 112.20 and 111.90 continues to represent the most important technical floor on the chart. This zone contains the lower Bollinger Band, the 100-day SMA, and the recent reaction low that triggered the latest bounce. As long as AUD/JPY remains above this support cluster, the broader market structure favors higher prices. A breakdown below 111.90, however, would signal that sellers are gaining the upper hand and could expose deeper downside levels near 111.00 and 110.30. Central Banks Hold the Key to the Next Breakout The technical picture is improving, but upcoming monetary policy decisions may ultimately determine the pair’s next major move. Markets expect the RBA to leave rates unchanged while continuing to assess inflation risks. Meanwhile, expectations remain elevated that the Bank of Japan will continue normalizing policy and eventually raise rates further. Any surprise from either central bank could trigger a sharp repricing across AUD/JPY. For now, the chart favors cautious optimism. Buyers successfully defended a major support zone, momentum indicators are stabilizing, and price has started to recover from recent lows. If resistance near 113.60 gives way, the path toward the 114.80 region could reopen. Until then, traders are likely to remain focused on whether this rebound develops into a fresh bullish leg or merely a temporary recovery within a broader consolidation phase.