AUD/JPY Holds Firm Near 113.70 as RBA Hawkishness Offsets Yen Intervention Threats AUD/JPY continues to grind higher at the start of the week, hovering near the 113.70 region after extending its recovery from last week’s lows. Price action on the four-hour chart shows a market that is slowly rebuilding bullish momentum rather than exploding higher in a straight line, and that distinction matters here. The pair has been forming a sequence of higher lows since the sharp late-April washout, while buyers continue to defend dips above the 113.00 handle. What stands out technically is how the pair has reclaimed the cluster of moving averages that had capped rebounds earlier in the month. That usually signals improving confidence underneath the surface, especially when momentum indicators begin stabilizing at the same time. The broader macro backdrop still favors the Australian Dollar. The Reserve Bank of Australia has leaned firmly hawkish again, and markets are adjusting to the idea that Australian rates could remain restrictive for much longer than previously expected. The latest rate increase to 4.35% reinforced that message. Inflation remains sticky, commodity prices are rising again, and policymakers appear uncomfortable easing too early. Traders are increasingly pricing a scenario where rates push toward 4.7% before any meaningful policy reversal appears on the horizon. That’s a major contrast with Japan, where monetary policy remains comparatively loose despite periodic warnings from officials about currency weakness. Yield spreads continue to lean heavily in favor of the Aussie, and for now that remains one of the clearest drivers behind AUD/JPY resilience. Looking at the chart itself, the 113.70 area is becoming an important battleground. Price has repeatedly tested this zone and is now trying to stabilize above it after several failed attempts earlier in the week. A sustained move beyond 114.00 would likely expose the recent swing highs around 114.40 and potentially reopen the path toward the 114.70 region. The structure on the H4 timeframe suggests buyers are gradually absorbing selling pressure rather than chasing aggressively, which often precedes another leg higher if momentum expands. RSI is holding near bullish territory without appearing overheated, while the MACD has crossed back into positive territory with histogram bars slowly strengthening. Stochastic readings are elevated, though not yet showing a decisive bearish rollover. That combination points to bullish momentum still being alive, even if the pace has cooled slightly near resistance. Fundamentally, sentiment around China is also helping the Australian Dollar maintain support. Markets are paying close attention to the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping, particularly because Australia’s economy remains deeply tied to Chinese demand. Any signs of easing geopolitical tension or improving trade cooperation could feed directly into stronger commodity demand expectations, which tends to lift the Aussie rather quickly. The latest Chinese inflation figures added another layer of optimism after both CPI and PPI exceeded forecasts. Traders took that as a signal that domestic demand conditions in China may not be deteriorating as sharply as feared earlier this year. That matters for Australia not only through exports but also through overall regional growth expectations. On the Japanese side, the Yen remains trapped between weak fundamentals and intervention fears. Rising oil prices continue to create problems for Japan given its dependence on imported energy, and WTI holding near the $95 region only intensifies those pressures. A weaker Yen naturally follows when import costs rise while domestic yields remain suppressed. Still, traders are clearly cautious about becoming overly aggressive on the upside in AUD/JPY because intervention risk has not disappeared. Tokyo’s reported market operations during Golden Week reminded investors that authorities are willing to step in when volatility accelerates too quickly. That lingering threat explains why rallies in Yen crosses are becoming more controlled instead of disorderly. Even so, intervention tends to slow trends rather than fully reverse them unless monetary policy changes alongside it. From a trading perspective, the bullish case remains favored while the pair holds above the 113.20–113.00 support band. That zone now acts as the first meaningful defense area for buyers and lines up closely with the rising short-term moving averages on the chart. A clean break below it would weaken the immediate recovery structure and could trigger a deeper retreat toward 112.50. Until that happens, dips may continue attracting demand, particularly if global risk appetite stays stable and RBA expectations remain elevated. The bigger picture still points toward a market attempting to rebuild upside momentum after a violent correction phase, although traders should expect volatility around geopolitical headlines, oil price swings, and any renewed intervention rhetoric from Japanese officials. Right now, though, the technical tone and macro narrative are finally starting to align again in favor of AUD/JPY bulls.
