The Australian dollar climbed to a record high of 114.20 against the Japanese yen during Thursday’s European session, extending an uptrend that began on April 6. The pair later eased slightly but remained firm around 114.10, holding near its new peak.
The move reflects strong buying interest in the cross, underpinned by policy divergence between the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ), as well as solid support from Australia’s commodity backdrop.
Aussie pushes to new peak versus yen
The Australian dollar climbed to a record high of 114.20 against the Japanese yen during Thursday’s European session, extending an uptrend that began on April 6. The pair later eased slightly but remained firm around 114.10, holding near its new peak.
The move reflects strong buying interest in the cross, underpinned by policy divergence between the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ), as well as solid support from Australia’s commodity backdrop.
Technical outlook: momentum strong, but overbought signals emerge
From a technical perspective, the AUD/JPY pair is trading comfortably above both its nine-day and 50-day exponential moving averages (EMAs), a configuration that points to sustained upside momentum.
The 14-day relative strength index (RSI) is hovering just above 70, signaling overbought conditions. While this often warns of a possible pause or correction, the ongoing buying pressure suggests bullish sentiment remains intact for now.
Key levels watched by traders include:
- Immediate resistance: Near the upper boundary of the ascending channel around 114.70. A clear break above this level could open the way to further gains.
- First support: The nine-day EMA at 112.76, seen as the first line of defense on any pullback.
- Secondary support: The lower edge of the ascending channel near 111.70.
A sustained drop below 111.70 would expose the 50-day EMA around 110.61. A break under that medium-term support would shift focus toward the 108.79 area, a nearly two-month low, signalling a more meaningful loss of recent bullish momentum.
Broader currency performance: Aussie leads peers
The Australian dollar outperformed most major currencies on Thursday:
- Up 0.33% against the New Zealand dollar
- Up 0.15% versus the US dollar
- Up 0.18% against the euro
- Up 0.10% against the British pound
Moves against the yen and Canadian dollar were more limited, but the cross with the yen nonetheless set a new multi-year high.
Policy divergence supports the Australian dollar
Fundamental drivers continue to favor the Australian dollar over the yen.
The RBA has been tightening policy to confront persistent inflation. It raised its cash rate in both February and March as price pressures remained elevated. Underlying inflation was recorded at 3.3% in the year to February, and the International Monetary Fund recently lifted its forecast for Australia’s inflation in 2026 to 4%.
In contrast, Japan’s economy is expected to grow by about 0.8% this year, and the BoJ is only slowly retreating from decades of ultra-low interest rates. Current expectations suggest the BoJ may raise its policy rate twice in 2026, a measured approach compared with tightening cycles elsewhere.
This divergence in central bank stances has widened the interest rate differential, generally favoring the higher-yielding Australian currency over the yen. Higher returns typically make holding the Aussie more attractive in carry trades.
Commodities add an underlying tailwind
Australia’s key commodity exports, particularly iron ore and coal, continue to provide a structural base of support for the currency. As global demand patterns evolve, resilient or rising commodity prices tend to underpin the Australian dollar, reinforcing the policy-driven strength against lower-yielding currencies like the yen.
What traders are watching next
Traders are now focused on whether AUD/JPY can decisively clear resistance at 114.70, the upper band of the current ascending channel. A strong break above this level would confirm the continuation of the bullish trend and could prompt further upside targets.
On the downside, a failure to maintain the current upward momentum would likely bring the nine-day EMA at 112.76 into play as initial support. A move below that would shift attention to 111.70, the lower channel boundary. A breach of that zone, followed by a drop under the 50-day EMA around 110.61, would be viewed as a more meaningful signal that the recent rally is losing steam and that a deeper correction toward the 108.79 area may be under way.
Looking for safer ways to profit from macro trends like AUD/JPY? Explore Toobit’s crypto trading 101 guide next.
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