FX.co ★ UFCworriers | AUD/JPY

Fundamental Analysis The AUD/JPY currency pair is trading at 110.50 as of Friday's session, down 0.04%. The pair remains in a narrow range, as both AUD and JPY are supported by rising expectations of tighter monetary policy from their respective central banks. No Australian economic data is scheduled for Friday. Investors are now focusing on recent hawkish remarks from RBA officials, which have increased expectations of a rate hike, with markets currently expecting about 50 basis points more in interest rate hikes before the end of 2027 to take the policy rate to 4.85%. Assistant Governor of the RBA Sarah Hunter on Tuesday noted that interest rates may have to be hiked further if inflation remains more persistent than the market currently expects. Deputy Governor of the RBA Andrew Hauser was equally bullish, saying that the high inflation is "one big problem" that continues to plague the Australian economy. Hauser also said the RBA would hike interest rates further if the monetary policy committee deems it appropriate. In this context, RBA Rate Tracker puts the odds of an increase in the Official Cash Rate (OCR) to 4.6% at the next RBA monetary policy meeting at 72%, up from 54% at the beginning of the month. In the Japanese economy, data released on Friday makes a stronger case for monetary tightening by the Bank of Japan (BoJ). The Producer Price Index (PPI) rose 7.6% YoY in August after rising 7.7% in July, and beat market forecasts for a more pronounced deceleration to 7.4%. Therefore, the Japanese yen remains supported by expectations of more aggressive monetary tightening by the Bank of Japan. The continued reversal of carry trades, along with capital repatriation, supports a positive outlook for the Japanese currency. Nonetheless, the JPY's upside is constrained by rising oil prices. Ongoing tensions between the United States (US) and Iran, with no signs of de-escalation, keep global inflation concerns high. Technical Analysis On the intraday chart, AUDJPY is trading at 110.49, showing a bearish bias as price trades below the 200-day simple moving average at 110.92 and the 100-day simple moving average at 113.05. The confluence of these resistances suggests any upside could run into supply, and the Relative Strength Index (14) at 31 indicates the price is oversold but not in an oversold reversal. Initial support is expected at the recent horizontal support at 109.24, with a stronger level at 107.70 if selling pressure increases. On the resistance side, the 200-day simple moving average at 110.92 forms the first resistance level, followed by 113.05 at the 100-day simple moving average and finally the horizontal resistance at 115.00.