The AUD/JPY pair showed strength, reaching about 102.75 during early European trading on Thursday. This strength was supported by technical indicators, including a bullish RSI and positions above key moving averages. The pair faces initial resistance at 102.88, with support expected at 101.41. The Australian Dollar has gained against the Japanese Yen, partly due to decreasing chances of policy easing from the Reserve Bank of Australia (RBA). The RBA is likely to keep its cash rate at 3.60% in the upcoming monetary policy meeting, with potential changes not expected until 2026 due to ongoing inflation concerns. Technical analysis indicates that AUD/JPY is trading at 102.79, above the 20-day SMA at 101.41 and the 100-day EMA at 98.75. The Bollinger Bands show buying pressure, while an RSI of 65.02 suggests bullish sentiment without overbought conditions. The price staying above the 20-day average supports momentum for the pair. Key factors influencing the Australian Dollar include the RBA’s interest rates, iron ore prices, the Chinese economy, and Australia’s trade balance. The RBA affects AUD through interest rates and policies of quantitative easing or tightening. Furthermore, Australia’s trading relationship with China means its economic health also impacts the AUD. Changes in iron ore prices and the trade balance are critical for the currency’s value. With AUD/JPY stabilizing around 102.75, the positive technical signals reinforce confidence in the uptrend. The strong RSI indicates further potential for growth. Next week’s RBA policy meeting will be a key event to watch. Expectations that the RBA will maintain its cash rate at 3.60% are supported by the October 2025 monthly CPI indicator, which was 3.8%. This persistent inflation above the target band suggests that rate cuts are not likely in the near future. Derivative markets appear to be eliminating any dovish surprises, making long AUD positions against the JPY attractive. Additionally, the commodity markets are supporting the Aussie. Iron ore prices recently held above $135 a tonne, benefiting Australia’s export earnings. This is backed by data from China, showing the Caixin Manufacturing PMI for November 2025 expanded to 50.9. On the Japanese side, the Bank of Japan remains relatively dovish. The interest rate difference between the RBA’s 3.60% and the BoJ’s low rate creates a favorable environment for carry trades. This situation is similar to the dynamics seen from 2022 to 2024, where central bank policy differences drove the pair’s movement. Given this positive outlook, traders might consider buying call options or setting up bull call spreads with strike prices above the 102.88 resistance level. The support at 101.41 is significant; any dip to this 20-day average could be seen as a buying opportunity. The primary risks in the coming weeks include an unexpectedly dovish statement from the RBA or a sudden decline in Chinese economic data.

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