AUD/JPY Extends Its Consistent Uptrend

Market Analysis – December 8
The AUD/JPY pair has been demonstrating a consistent upward trend, supported largely by Australia’s relatively hawkish monetary stance, which makes the Australian Dollar more attractive to investors compared to the Japanese Yen. The higher interest-rate environment in Australia encourages traders to favor the AUD, especially against a low-yielding currency like the JPY.

However, despite the strong bullish momentum, there are reasons to anticipate a potential price correction. Australia’s recent inflation reading of 3.8% remains elevated, and if inflation begins to cool more quickly than expected, the Reserve Bank of Australia (RBA) may shift towards a dovish tone or consider future rate cuts. Any hint of monetary easing could reduce the AUD’s yield advantage and trigger short-term downside movement in the AUD/JPY pair.

On the other hand, the Japanese economy continues to operate under very low interest rates, which helps explain why the Yen has been weakening against multiple major currencies. The Bank of Japan (BoJ) maintains its policy rate around 0.5%, and while other central banks have tightened aggressively over the past year, the BoJ is only beginning to normalize its policy—moving gradually and cautiously. This ongoing policy divergence continues to place downward pressure on the Yen.

Overall, although the fundamentals currently favor further AUD/JPY strength, traders should remain cautious. Shifts in inflation trends, changes in RBA policy sentiment, or unexpected BoJ tightening could all influence a reversal or correction in the pair.

AUD/USD Key Levels

Demand Levels: 104, 105, 106
Supply Levels: 102, 101, 100

AUD/USD Consistently Push Bullish Run Forward
Since April 2025, the AUD/JPY pair has sustained a consistent bullish trend. This upward momentum began after the bearish market found solid support and bottomed around the 86.00 level in April. By August, the pair had climbed into the 96.00 price zone, where it briefly consolidated. However, bullish momentum was reaffirmed when the price broke above the key 98.00 resistance level.

Now trading around the 103.00 level, the pair continues to show strong bullish structure. The formation of higher highs and higher lows signals that buyers remain firmly in control. Additionally, the relatively narrow bandwidth of the Bollinger Bands suggests a steady, one-sided market sentiment dominated by the bulls, with limited volatility on the downside.

However, the Relative Strength Index (RSI) is nearing overbought territory, currently hovering around 66, which indicates that bullish momentum may be stretched. While this does not necessarily signal an immediate reversal, it does suggest that traders should be cautious of potential short-term pullbacks or corrective movements.

AUD/USD Short-Term Trend: Indecision

Even on the 4-hour chart, the AUD/JPY pair maintains a clearly bullish outlook. Although traders are showing caution around the 103.00 price level, the overall market structure remains strongly one-sided in favor of the bulls. There is little indication that sellers are exerting meaningful pressure at this stage.

Additionally, the Bollinger Bands do not reflect any significant expansion in volatility, which suggests that the likelihood of a sharp price breakdown is relatively low. For now, the price is holding steady around 103.244, but if bullish momentum continues to build, a breakout above the 104.00 level may soon follow.

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