AUD/JPY Price Forecast: Strengthens above 110.50, while BoJ hike bets cap gains below 100-day SMA

The AUD/JPY cross trades in positive territory around 110.90 during the early European trading hours on Wednesday. However, the potential upside for the cross might be limited amid hawkish comments from Japanese authorities.

Bank of Japan (BoJ) Deputy Governor Ryozo Himino said on Wednesday that underlying inflation is almost at the central bank’s 2% target. Himino added that financial conditions are still accommodative.

Earlier this week, BoJ Governor Kazuo Ueda stated that underlying inflation is near the 2% target. He further stated that if the bank raises the short-term policy rate, long-term interest rates are likely to rise steadily with the policy. Last week, board member Junko Koeda said the central bank should not become overly cautious about raising rates, at their highest in 31 years, given the significant upside risks to inflation.

According to a majority of economists in a Reuters poll, the Japanese central bank is likely to raise interest rates in December to 1.50%, following June and September increases.

BoJ signals inflation progress as markets eye December hike risk

Analysts at Danske Bank highlight a more confident tone from Bank of Japan Governor Ueda, who now judges that underlying inflation is "quite close" to the 2% target, pointing to tight labour markets and strong global AI demand as key sources of price pressure. Danske Bank notes that Ueda also cautioned that "failing to raise rates at an appropriate pace could push long-term bond yields higher," underscoring the risks of lagging behind the inflation trend. Looking ahead to the BoJ’s next meeting, which concludes on 30 October 2026, Danske Bank observes that markets expect rates to remain at 1.25% but will be focused on any guidance that keeps "a hike to 1.5% as early as December on the table."

Ueda leans mildly hawkish as inflation loop strengthens

FXS Speechtracker scores the speech at 7/10, slightly below Ueda’s 7.4/10 average, but the emphasis on “underlying inflation near 2%” and a positive wages–prices loop marks a modest hawkish tilt. Ueda highlights demand-led inflation from robust global activity, domestic capex and exports, alongside tight labor markets, while warning that miscalibrated policy could push long-term JGB yields higher, reinforcing the need to anchor core inflation near 2%.

At the same time, Ueda stresses no change in the fundamental bond taper approach and refuses to preannounce emergency bond measures, signaling a cautious, data-dependent stance. The message that properly calibrated rate hikes would allow long-term rates to rise “steadily” while keeping financial conditions accommodative supports a controlled normalization path, which is mildly supportive for the Yen as markets price a gradual shift away from ultra-easy policy.

Technical Analysis: Bearish outlook of AUD/JPY prevails under the 100-day SMA

In the daily chart, AUD/JPY keeps a bearish near-term tone as it remains below the 100-day simple moving average (SMA). Price is holding above the Bollinger middle band, the 20-day SMA, which suggests some short-term stabilization, while the Relative Strength Index (14) at 52.30 hints at neutral-to-slightly positive momentum rather than an oversold condition.

On the topside, initial resistance level emerges at the 111.00 psychological level, en route to the upper boundary of Bollinger band near 111.25. The more substantial barrier is located at the 100-day SMA around 112.10, where rallies are likely to face stronger supply. 

On the downside, immediate support level is seen at the Bollinger middle band at 110.20. A deeper bearish extension will see a drop to the October 16 low of 109.34, followed by the lower limit of Bollinger band around 109.15 if sellers regain control.