Last Updated on September 16, 2026 by Deon
The Australian Dollar (AUD) moves sideways against the Yen (JPY) with AUD/JPY hovering near 110.55 on Wednesday. Traders stay cautious before the Bank of Japan (BoJ) monetary policy decision as markets widely expect another interest‑rate increase.
AUD/JPY stays caught between two monetary‑policy expectations. A hawkish BoJ could strengthen the Japanese Yen while expectations of further tightening by the Reserve Bank of Australia (RBA) could keep the Australian Dollar strong.
BoJ Rate Decision Takes Center Stage
The BoJ is expected to lift its policy rate by 25 basis points moving it from 1.00% to 1.25%. If this happens Japanese borrowing costs would reach their level since April 1995 says the FXStreet report.
However the rate decision may not be the focus for traders. Markets will also look closely at comments from BoJ Governor Kazuo Ueda for clues about monetary‑policy moves.
If the central bank signals that more rate hikes could come demand for the Yen may grow stronger. Traders already think about another rate hike in December.
Australian Dollar Gets Support From RBA Expectations
The Australian Dollar has its source of monetary‑policy support. The RBA has kept its Cash Rate at 4.35% in its last three meetings after three straight rate increases earlier in the year. Persistent inflation pressure still pushes markets to think about another increase.
According to the FXStreet report markets priced in a 78% chance that the RBA will lift the cash rate to 4.60% at its next meeting.
This expectation could help stop selling pressure on AUD/JPY especially if Australian rate expectations stay firm.
Rising Oil Prices Add Pressure on the Yen
Oil prices are another factor for the Japanese currency. Japan relies heavily on imported energy higher oil prices can raise the countrys import costs and put pressure on its trade balance. The ongoing Middle East conflict has pushed energy prices higher adding another challenge for the Yen.
For AUD/JPY traders this sets a backdrop. A stronger Yen from BoJ policy could weigh on the pair while higher energy costs could also pressure Japans external accounts at the same time.
AUD/JPY Technical Focus
With AUD/JPY trading near 110.55 traders will likely watch if AUD/JPY can keep its position around the 110.00 area.
A sustained move above levels could keep the broader upside push alive especially if the RBA stays quite hawkish. On the hand a break below 110.00 could raise downside pressure and bring lower support levels into focus.
The BoJs policy guidance will be especially important because a stronger signal for rate hikes could quickly change expectations for the Yen.
What Traders Should Watch
The main factors that influence AUD/JPY are:
BoJ interest‑rate decision: Markets expect a 25‑basis‑point increase.
BoJ guidance: Comments from Governor Ueda could set the Yens next direction.
RBA expectations: Markets still think about another Australian rate increase.
Oil prices: Higher energy costs can affect Japan because it relies on imports.
AUD/JPY price action: The 110.00 area stays an important psychological level.
Conclusion
AUD/JPY stays mostly steady around 110.55 as traders prepare for the BoJs policy decision. Expectations for monetary tightening keep the Yen supported while prospects for more RBA tightening help the Australian Dollar stay strong.
The immediate direction of AUD/JPY could rely heavily on the BoJs guidance about rate increases. Traders will watch both the rate decision and Governor Uedas comments for clues about the move, in AUD/JPY.
