Technical Analysis
AUD/JPY dropped to around 103.15 during early trading on Monday in Europe. Although Australian Dollar was affected by disappointing data from China, the overall outlook remains positive, supported by the 100-day EMA and RSI indicators. The first resistance level is at 104.42, while support is found at 102.42.
In November, China’s Retail Sales grew by 1.3%, down from 2.9% in October, while Industrial Production rose by 4.8%, both falling short of expectations. This could negatively impact the AUD as China is Australia’s main trading partner and may decrease demand. The focus now shifts to the Bank of Japan’s expected interest rate increase to 0.75%.
AUD/JPY stays above the 100-day EMA at 99.38, keeping a bullish attitude. The price is above the Bollinger midline but below the upper band. The RSI is at 60.04, above the neutral line of 50, supporting a bullish view. For further upside, the price needs to break through 104.42. Initial support rests at 102.42, with stronger support at 99.38.
Factors like the Reserve Bank of Australia’s interest rates, resource exports, and Trade Balance are crucial in shaping AUD’s value. China’s economic health greatly affects AUD, particularly iron ore prices, which are vital for Australia’s exports. A positive Trade Balance should boost the AUD, while a negative one may weaken it.
As of December 15th, 2025, AUD/JPY is trading firmly around 105.50, rising above last week’s 103.15 level. This upward movement confirms the bullish trend, supported by strong iron ore prices above $140 per tonne. The technical outlook remains positive, with the pair well above previous resistance.
Market Dynamics
Concerns about weak Chinese data that impacted the Aussie dollar earlier this month are easing. Although the November figures released last week were disappointing, new data today shows an upward revision of Chinese Industrial Production to 5.1% and a slight rebound in Retail Sales. This optimistic view from Australia’s biggest trading partner is helping the AUD.
Looking back, the Bank of Japan’s decision last Friday significantly influenced the recent rise of the pair. While markets expected a hawkish rate hike to 0.75%, the BoJ opted for a more cautious adjustment to 0.50%, which weakened the Yen and widened the interest rate gap favoring the AUD.
On the Australian front, the Reserve Bank of Australia kept its cash rate steady at 4.35% during its December meeting, as anticipated. The latest quarterly inflation data from October shows CPI at 3.8%, which is above the RBA’s target. This indicates that rate cuts aren’t likely soon. This difference in policy between a cautious RBA and a slow-moving BoJ is driving AUD/JPY strength.
Technically, the pair has clearly broken past the 104.42 resistance level we’ve been monitoring. This level may now serve as a support area for any pullbacks in the upcoming weeks. The RSI on the daily chart remains in bullish territory but hasn’t reached overbought levels, suggesting more upside potential.
For derivative traders, this market environment indicates that buying call options or creating bull call spreads could be an effective way to take advantage of further gains. These strategies would benefit from a consistent rise towards the 106.00-107.00 area. Any dip towards 104.50 could be an opportunity to enter or add to bullish positions, while keeping an eye on upcoming global inflation data.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
