The Australian Dollar softened against the Japanese Yen during Monday's early trading, sending the AUD/JPY cross down toward the 109.70 region. The pair traded on the back foot beneath the crucial 110.00 psychological mark, with broader technical indicators continuing to reflect an intact bearish outlook. Live market measurements showed the pair holding around 109.64 after settling at a previous close of 109.40. Market participants remain focused on key support levels as downward momentum retains control over the currency cross.
Japan Maintains Stance on Emergency Oil Reserves
On Japan's domestic policy front, Chief Cabinet Secretary Minoru Kihara clarified Monday that the government has no immediate intention to conduct an additional release of crude oil from national stockpiles. Kihara explained that the nation had already deployed crude supplies, even as the G7 framework agreed to release 100 million barrels of diesel and crude from strategic emergency stockpiles. The remarks indicate that authorities view earlier domestic releases as sufficient under current conditions, ruling out immediate secondary taps into government reserves.
Bank of Japan Expectations and Upcoming Economic Data
Market observers are closely watching Japanese economic indicators and central bank communications to gauge the trajectory of the Japanese Yen. Analysts at MUFG/BTMU pointed out that Bank of Japan Governor Kazuo Ueda's forthcoming remarks and incoming wage statistics will be critical for determining the timing of the central bank's next policy move. The analysts projected that headline labour cash earnings growth is likely to moderate to 3.7% from 4.3% as summer bonus payments return to normal levels. However, they stressed that underlying base-pay momentum is poised to remain resilient, keeping the door open for further monetary tightening. MUFG/BTMU also noted that Governor Kazuo Ueda's scheduled appearance on 6 October will deliver valuable forward guidance, while upcoming data on household spending and the current account will help shape expectations regarding the BoJ's interest rate trajectory.
Technical Structure and Momentum Oscillators
The daily timeframe reveals an entrenched bearish structure for AUD/JPY. The cross trades underneath its 20-day simple moving average (SMA) Bollinger middle band as well as the 100-day SMA. Furthermore, price action is capped below the upper Bollinger band, reflecting heavy resistance following the pair's recent downward descent. The Relative Strength Index (RSI) stood near 34.97, positioned just above oversold thresholds. This posture signals that while downward pressure remains firmly in charge, momentum is becoming somewhat extended. Additional daily indicators place the MACD at -0.71 below its -0.58 signal line, while moving averages display the 20-day EMA at 110.85, the 50-day EMA at 111.72, and the 200-day EMA at 109.90. The 50-day and 200-day SMAs sit at 112.05 and 111.41, respectively.
Crucial Support and Resistance Price Zones
In terms of upside levels, the immediate technical obstacle is situated at the Bollinger middle band at 110.65. Beyond that barrier, the upper Bollinger band at 112.20 and the 100-day SMA at 112.56 combine to create a broader overhead supply zone. The initial psychological barrier remains highlighted near 100.00, with the central pivot positioned around 109.55. On the downside, prompt support is established at 109.20, complemented by the lower Bollinger band situated near 109.08 and S1 support around 109.22. A decisive and sustained move below this floor would likely expose the cross to deeper declines in subsequent sessions, bringing targets near S2 support at 108.79 and secondary support at 108.74 into focus. Over the trailing 52-week period, the pair has oscillated between 96.30 and 114.96.
Broader Trends Across Forex and Commodity Assets
Developments across other currency pairs reflected broad-based volatility on Monday. The Australian Dollar also faced selling pressure against the greenback, with AUD/USD slipping toward 0.6900 during late Asian trading. The decline was fueled by resurging US Dollar strength tied to geopolitical conflicts in the Middle East and the Russia-Ukraine theater. Market focus for that pair continues to revolve around crude oil prices, Treasury bond yields, and expectations surrounding the Reserve Bank of Australia.
Concurrently, USD/JPY recovered earlier losses and reclaimed the 158.00 handle in Asian trading, continuing to consolidate within its recent one-week range. Geopolitical tension supported the greenback despite receding expectations of Federal Reserve rate hikes. Nevertheless, potential upside in the pair could face limitations due to hawkish BoJ expectations and market wariness over potential Japanese currency intervention.
In the commodities space, Gold struggled to sustain early Asian gains, hovering just under $4,150 and finishing nearly flat amid crosscurrents. The US Dollar rebounded strongly to its highest level since April 2025, brushing off Friday's weak employment figures and containing gains in bullion. Diminishing expectations for an October interest rate hike by the Federal Reserve, however, helped cushion the precious metal's floor. Meanwhile, EUR/USD slumped to its lowest point since May 2025, touching 1.1312 and remaining well beneath its January high of 1.2082. The European currency continues to struggle under the weight of US Dollar dominance, geopolitical turmoil, and European vulnerability to surging energy prices.
