AUD/JPY Extends Bearish Run Below 111.50 as Downside Momentum Builds

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AUD/JPY Extends Bearish Run Below 111.50 as Downside Momentum Builds

The AUD/JPY currency pair extended its bearish spell on Wednesday, trading firmly below the 111.50 mark as sellers maintained control amid persistent downside pressure. The cross has weakened for a third consecutive session, reflecting growing risk aversion in the broader market and diverging monetary policy expectations between the Reserve Bank of Australia and the Bank of Japan.

Technical breakdown below key support

From a technical perspective, the pair has breached the 111.50 support zone, which previously acted as a short-term floor during early March. The breakdown signals a continuation of the bearish trend that began in late February, when the pair reversed from resistance near 113.00. The 14-day Relative Strength Index (RSI) has dipped below 40, indicating that bearish momentum is accelerating and has not yet reached oversold territory.

The next major support level lies at 110.80, a level that held during the mid-February selloff. A decisive break below that could open the door toward the 110.00 psychological barrier, which has not been tested since early January. On the upside, the 111.50 level now serves as immediate resistance, followed by the 112.00 round number.

Fundamental drivers weighing on the pair

The Australian dollar has come under pressure this week following weaker-than-expected domestic employment data and a dip in iron ore prices, Australia’s top export. Meanwhile, the Japanese yen has found support from safe-haven flows as geopolitical tensions in the Middle East and uncertainty over global trade policy continue to dampen risk appetite.

Market participants are also pricing in a higher probability that the Bank of Japan will maintain its ultra-loose monetary policy stance longer than previously anticipated, which has historically provided a floor for the yen. In contrast, the RBA is seen as likely to hold rates steady, narrowing the yield differential that had previously favored the Australian dollar.

What this means for traders

For short-term traders, the persistence of the bearish bias below 111.50 suggests that selling rallies remains the preferred strategy until a clear reversal pattern emerges. The absence of bullish divergence on the daily chart reinforces the view that the path of least resistance is lower. However, traders should be cautious near the 110.80 support zone, as oversold conditions could trigger a short-term bounce.

Longer-term investors should monitor the upcoming RBA meeting minutes and BOJ policy statements for any shift in forward guidance that could alter the current trajectory. A surprise hawkish tilt from the BOJ or a dovish signal from the RBA would likely accelerate the current downtrend.

Conclusion

The AUD/JPY pair remains firmly in bearish territory below 111.50, with technical indicators and fundamental factors aligning to support further downside. Key levels to watch are 110.80 as immediate support and 111.50 as resistance. The broader trend will depend on upcoming central bank communications and shifts in global risk sentiment.

FAQs

Q1: Why is the AUD/JPY pair falling?
The pair is declining due to a combination of weaker Australian economic data, falling iron ore prices, and safe-haven demand for the Japanese yen amid geopolitical uncertainty.

Q2: What is the next key support level for AUD/JPY?
The next major support is at 110.80, followed by the psychological 110.00 level if selling pressure continues.

Q3: Should I buy the dip in AUD/JPY?
Technical indicators suggest the downtrend remains intact, and buying dips is not recommended until a clear reversal pattern or bullish divergence appears on the daily chart.

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