AUD/JPY Breaks and Sustains Above 104

Market Analysis – December 22
The AUD/JPY pair is trending higher, largely due to persistent weakness in the Japanese yen. This behavior is consistent across several yen-denominated pairs, many of which are exhibiting similar bullish price action.

A key driver of this trend is the sharp contrast in monetary policy between Australia and Japan. The Reserve Bank of Australia (RBA) maintains an interest rate of around 3.5%, which remains relatively high, while Japan’s interest rate is still near 0.75%. Although the Bank of Japan (BoJ) has recently implemented a rate hike, its policy rate remains significantly lower than those of most major economies.

This wide interest-rate differential encourages carry-trade activity, where traders borrow in low-yielding currencies such as the yen and invest in higher-yielding assets like the Australian dollar. As a result, demand for the AUD remains supported, while the yen continues to face downward pressure, sustaining the bullish trend in the AUD/JPY market.

AUD/JPY Key Levels

Supply Levels: 105, 106, 107
Demand Levels: 103, 102, 101

AUD/JPY Breaks Key Resistance and Holds Above It

From both price action and indicator perspectives, the AUD/JPY market is clearly bullish. The price trend remains firmly ascending, while the Relative Strength Index (RSI) has spent much of the recent trading sessions in the upper region of the indicator. This behavior signals strong bullish dominance and confirms that the prevailing market bias remains to the upside.

Recently, the 104.00 price level emerged as a key resistance zone. In the previous daily trading session, bulls encountered some difficulty at this level as they faced noticeable bearish pressure. However, in today’s session, price action has successfully broken above this resistance and is now sustaining above it.

This development strengthens the bullish outlook and suggests that the market may be positioned for further upside continuation in the near term.

AUD/JPY Short-Term Trend

Following the strong surge above the critical 104.00 price level, the market has continued to consolidate above this zone. This consolidation may persist for some time and is generally viewed as a healthy pause, as the likelihood of further upside continuation remains high.

However, if price faces rejection near the 104.53 level, the 104.00 support zone is expected to act as a key buffer against deeper pullbacks. This support should help stabilize the market, provided there is no significant shift in underlying fundamentals.

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