AUD/JPY extended gains that began on 6 April, trading near 114.10 during European hours on Thursday. The daily chart shows the pair rising within an ascending channel.
Price is trading above the nine-period and 50-period Exponential Moving Averages. The 14-day Relative Strength Index is just above 70.00, indicating overbought conditions.
Current Price Action And Resistance Levels
The pair stayed close to an all-time high of 114.20 set earlier in the session. The next level on the upside is the channel top near 114.70.
Support is at the nine-day EMA at 112.76, then the channel base around 111.70. If it breaks below the channel, the 50-day EMA at 110.61 is next.
A move under 110.61 could put focus on the area near a nearly two-month low of 108.79. The technical section of the report was produced with the help of an AI tool.
The strong upward trend suggests momentum is on our side, but with the Relative Strength Index signaling overbought conditions, a simple long position carries risk. We see this as an ideal environment for using options, such as buying May call options to target a move toward the 114.70 channel boundary. A bull call spread could also be an effective strategy to reduce the initial cost while still profiting from further gains.
Fundamental Factors And Risk Management
This technical picture is supported by fundamental drivers that we saw solidify throughout 2025. The interest rate differential remains a powerful factor, with the Reserve Bank of Australia’s cash rate at 4.35% while the Bank of Japan’s policy rate hovers near 0.1%. This significant yield gap continues to make the carry trade attractive, discouraging bets against the Australian dollar.
However, the risk of a short-term pullback toward the 112.76 support level should not be ignored, especially given the stretched RSI. We can hedge this risk by purchasing put options, which would protect existing long positions or offer a way to profit from a temporary dip. We remember the sharp but brief corrections that occurred during similar overbought periods in mid-2025, making a small hedge a prudent move.
We are also watching key external factors, such as iron ore prices, which have recently stabilized around $115 per tonne after a period of weakness. Any further strength in commodities, combined with positive economic signals from China, would likely fuel another leg up for the cross. This would reinforce the case for holding bullish derivative positions into the coming weeks.
