AUD/JPY Price Forecast: Climbs above 109.50 as technicals support bullish outlook

• AUD/JPY drifts higher to around 109.60 in Tuesday’s early European session. 
• The constructive outlook for the cross remains intact, with the price holding above the 100-day EMA. 
• The first upside barrier emerges at 110.60; the initial support level to watch is 109.00. 

The AUD/JPY cross attracts some buyers to near 109.60 during the early European session on Tuesday. Traders remain concerned over Japan’s fiscal health amid expectations that Prime Minister Sanae Takaichi will announce more stimulus to boost the economy.

A hawkish stance from the Reserve Bank of Australia (RBA) could underpin the Australian Dollar (AUD) against the Japanese Yen (JPY). Stronger-than-expected economic data have reinforced expectations that the Australian central bank would keep a tightening bias to address persistent inflationary pressures.

Traders brace for the Australian Consumer Price Index (CPI) inflation data, which is due later on Wednesday. The headline CPI is expected to show a rise of 3.7% YoY in January, compared to 3.8% prior. Any signs of softer inflation in Australia could drag the Aussie lower in the near term. 

Technical Analysis:

In the daily chart, AUD/JPY holds above the 100-period EMA, sustaining the prevailing uptrend. The slope remains positive, underpinning pullbacks. Price sits above the middle Bollinger Band as the bands narrow, signaling reduced volatility with a mild bullish bias. RSI at 59.95 is rising above its midline, affirming momentum on the topside without overbought risk.

Immediate resistance sits at the upper Bollinger Band at 110.60, and a daily close above this barrier would open room for an extension of the advance. Initial support aligns with the middle band at 109.00, with secondary support at the lower band at 107.37. With bands contracting, a break of either boundary could set the next directional leg, while the RSI’s steady climb would favor continuation if resistance gives way.