AUD/JPY stayed steady around 98.50 during the early European session on Wednesday. While the outlook is positive, a high RSI may limit gains, with initial resistance seen at 99.50. This trading pair is influenced by ongoing US-China trade tensions and global events, which may boost the Japanese Yen as a safe-haven asset. The daily chart shows AUD/JPY is well above its 100-day EMA, but the 14-day RSI indicates neutral momentum. This suggests a possible consolidation or a brief sell-off.

Key Resistance and Support Levels

Key resistance is expected between 100.95 and 101.00, while support is at 97.84 and 96.86. If the pair breaks above 100.00, it could rise towards 100.35. Conversely, a drop below 96.25 may signal a deeper downtrend. The Bank of Japan’s policies and global risk sentiment affect the Japanese Yen. The BoJ’s strategies often lead to Yen depreciation, but recent policy shifts and global rate changes have provided some support. Traditionally, the Yen serves as a safe haven during market turmoil, rising when uncertainty prevails. Currently, the AUD/JPY pair is holding around 98.50. Although the overall trend looks positive, the neutral RSI reading hints that immediate upward momentum is slowing down. This suggests a time for consolidation, so it might be wise to avoid aggressive long positions right now. Recent Australian inflation data for Q3 2025 showed a 3.8% increase, slightly below expectations, which eases pressure on the Reserve Bank of Australia for further rate hikes. This could limit the Australian dollar’s potential gains in the coming weeks and be a key factor in preventing a breakout above the 99.50 resistance level.

Geopolitical Uncertainty and Strategy

Japan’s core inflation remains steady at 2.7%, suggesting the Bank of Japan will continue its gradual policy normalization started in 2024. The narrowing yield gap between Japanese and US bonds further supports the Yen’s strength, creating a significant challenge for the AUD/JPY pair. Recent announcements in early October 2025 about a US review of Chinese trade tariffs have added geopolitical uncertainty, increasing demand for the safe-haven Yen. For derivative traders, the limited upside suggests that selling call spreads above the 100.00 level may be an effective strategy. We expect volatility to increase as these opposing economic forces develop. Given these circumstances, it may be wise to wait for a potential pullback to the initial support level of 97.84 before considering new bullish positions. Alternatively, buying put options with a strike below 98.00 could provide a cost-effective hedge against a downturn if key support levels fail. We believe the pair will remain in a range rather than make significant upward moves. Create your live VT Markets account and start trading now.

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