The AUD/JPY currency pair extended its rebound from the previous day’s late bounce near the 95.35-95.30 area, a one-week low, gaining positive traction during the Asian session on Friday. Despite initial strength, the pair struggled to sustain a move past the mid-96.00s and retreated to around 96.15 in the final hour, still marking its first gain in three days.
The Japanese Yen (JPY) weakened following comments from Bank of Japan (BoJ) Governor Kazuo Ueda, who suggested the possibility of bond market intervention to curb rising Japanese government bond (JGB) yields. Meanwhile, the Reserve Bank of Australia‘s (RBA) cautious rate cut earlier this week continued to support the Australian Dollar (AUD), providing additional tailwinds for the AUD/JPY pair. However, expectations of further BoJ rate hikes, fueled by Japan’s strong National CPI, limited JPY losses and capped the upside for the currency pair.
From a technical standpoint, the intraday rally stalled near a resistance zone defined by the upper boundary of a descending trend channel that has persisted for over a week. This resistance is located around the 96.45-96.50 area and is seen as a critical level. A sustained move above this barrier could push the AUD/JPY pair toward the 200-period Simple Moving Average (SMA) on the 4-hour chart, around the 97.00 mark, followed by last week’s swing high near the 97.30-97.35 range. If this level is cleared, additional upside could be in store.
A continuation of the recovery could bring the AUD/JPY pair toward the 98.00 mark, followed by the next significant resistance zone in the mid-98.00s. Beyond that, the pair could target the 98.75-98.80 region, which aligns with the year-to-date high around the 99.10-99.15 area, reached in January.
On the downside, the 95.70 level now serves as immediate support, followed by the recent swing low near the 95.35-95.30 zone and the key psychological 95.00 mark. A decisive break below 95.00 could signal a fresh bearish outlook, with potential for a deeper correction toward the multi-month low around 94.40-94.35, and possibly the 94.00 level.
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