AUD/JPY edged down to about 112.90 in early European trading on Wednesday, after Japan reported stronger Q1 2026 GDP growth. Japan’s economy grew 2.1% annualised in Q1 2026, up from 1.3% and above the 1.7% forecast.
Quarter-on-quarter GDP rose 0.5% in Q1, versus 0.3% in Q4 2025 and above the 0.4% estimate. In Australia, RBA minutes showed eight of nine board members supported the May rate rise to 4.35%, while one member preferred to wait for more data.
Market Implications For Audjpy
The minutes also warned that global energy shocks and Middle East tensions could lift domestic inflation and weigh on growth. This may limit gains in the Australian Dollar against the Yen.
On the daily chart, price remains above the 100-day SMA, while sitting under the Bollinger middle band. The RSI is near 46, suggesting weaker momentum.
Resistance sits near 113.65, with a higher level around 114.88. Support is at 112.45, then 111.47, with the 100-day SMA at 110.52.
Given the stronger-than-expected Japanese GDP figures, we are seeing a justified strengthening of the Yen. This economic resilience, with annualized growth hitting 2.1% in the first quarter, contrasts with a more cautious tone from Australia. This divergence sets up a clear dynamic for the AUD/JPY pair in the near term.
The Bank of Japan’s policy is a critical factor, as we recall its gradual move away from ultra-loose policy starting back in 2024. With recent Tokyo inflation data for April 2026 holding firm at 1.9%, the market is increasingly anticipating that the BoJ may be forced to act sooner than previously thought. This underlying expectation will continue to provide support for the JPY against the Aussie dollar.
Options Strategies And Risk Management
On the other side, the Reserve Bank of Australia’s concerns about global energy shocks are weighing on the AUD. Australia’s latest monthly inflation read came in at a stubborn 3.8%, well above the RBA’s target, but worries about growth may limit their ability to hike further. We have also seen prices for iron ore, a critical Australian export, slide nearly 8% over the past month to around $108 per tonne, reflecting concerns about global demand.
For the immediate weeks, the path of least resistance appears to be lower for AUD/JPY. We see value in buying put options with strike prices targeting the initial support level at the lower Bollinger band of 112.45. The cooling RSI indicator supports this view that the recent upward momentum has stalled for now.
However, we must respect the broader uptrend, as the cross remains well above its 100-day moving average. For those looking to position for a potential bounce later, selling cash-secured puts with a strike price below the key 110.52 level could be a sound strategy. This approach allows us to collect premium, banking on the idea that this deeper support will hold, much like it did during the pullbacks we witnessed in late 2025.
Considering the geopolitical risks highlighted by the RBA, implied volatility might increase. A bear put spread, which involves buying a higher-strike put and selling a lower-strike one, could be an effective way to manage costs. This strategy allows us to profit from a modest decline while capping both our risk and the initial cash outlay.
