AUD/JPY Price Forecast: Rebounds Above 112.50, Yet Capped Below 100-Day SMA

The AUD/JPY cross traded near 112.73 during early European trading on Friday, recovering from earlier lows but remaining below the 100-day simple moving average (SMA), with the overall technical outlook staying under pressure. Rising market bets on a Bank of Japan (BoJ) rate hike continue to drive yen buying, serving as a core factor limiting further upside in the cross.

**Yen Strength Narrative Strengthens**

Recent expectations of BoJ policy normalization have been building, with traders increasing bets on rate hikes in the coming months, directly boosting the yen's exchange rate. This macro driver makes any rebound in AUD/JPY appear tentative, even during intermittent improvements in risk sentiment. As long as rate hike expectations are not disproven, the yen's firmer undertone is unlikely to reverse, keeping the cross's upside potential persistently constrained.

**Clear Technical Resistance**

From a technical standpoint, AUD/JPY is currently holding above the 112.50 area for now, but the 100-day SMA above presents clear resistance. Until a decisive break above this average occurs, any intraday bounce may be viewed as corrective rather than a trend reversal. If subsequent buying fails to push prices above the average, the likelihood of a continued bearish pattern remains elevated.

**Key Focus Ahead**

Going forward, markets will closely monitor BoJ officials' speeches and key economic data to validate the rationale behind rate hike expectations. If related signals strengthen further, AUD/JPY could face renewed downside pressure; conversely, if expectations waver, the cross may see a brief window for recovery. Overall, however, as long as the anticipated divergence in monetary policy remains fundamentally unchanged, the path to recovery for this pair is likely to stay bumpy.