Australian Dollar/Japanese Yen Dynamics – 23 January 2026
Recent Movement
- The AUD/JPY pair fell sharply from the 109.00 level reached earlier in the week, retreating nearly 130 pips.
- The decline was primarily driven by renewed expectations that the Japanese Ministry of Finance may intervene to support the yen.
- Despite the drop, the cross has not completed a full reversal; it is trading near the 108.30 level and remains largely unchanged for the day.
Influencing Factors
| Item | Detail |
|---|---|
| Japanese Intervention Concerns | The “rate check” call from Japan’s Ministry of Finance has sparked speculation that authorities could step in, which strengthens the yen. |
| Bank of Japan (BoJ) Policy | The BoJ held its benchmark rate at 0.75 %, the highest in three decades, and signaled a potential rate hike at the next meeting. This stance supports the yen, albeit with limited immediate impact on the pair. |
| Australian Economic Data | Australian unemployment fell unexpectedly, providing a modest boost to the AUD. However, safe‑haven flows toward the yen have outweighed this positive development. |
| US Political Developments | President Trump’s tariff threats toward several European countries have increased demand for the yen as a safe‑haven currency, contributing to its recent appreciation. |
Technical Indicators
- Relative Strength Index (RSI): The RSI for AUD/JPY is signalling overbought conditions at a level above 70, suggesting a possible short‑term pullback.
- Support Level: A potential pullback could see the pair test the early‑week support level near 105.85.
- Resistance Level: The 109.00 mark, reached earlier in the week, remains a key resistance point.
Market Outlook
- The pair is likely to remain within a consolidation zone in the short term, with the yen’s defensive posture supported by both policy signals from Japan and safe‑haven flows linked to US tariff rhetoric.
- Any significant deterioration in Australian economic fundamentals or a reduction in safe‑haven demand could provide the AUD with additional upside.
- Conversely, further intervention speculation or an uptick in global risk appetite could reinforce the yen’s strength, pushing AUD/JPY lower toward the 106‑107 range.
Key Takeaway: AUD/JPY is presently influenced more by Japanese policy expectations and safe‑haven demand than by Australian economic data, leading to a modest retracement from the 109.00 level while remaining poised for short‑term consolidation.
