Yen and Aussie Strengthen amid Policy Clarity in Japan and China | 20th October 2025

Yen, Aussie Advance

Asian markets opened the week on a steady note as traders digested fresh policy signals from Japan and China. The Japanese Yen found support after Bank of Japan (BoJ) board member Takata remarked that the country has “roughly achieved” its inflation target, fueling speculation of a gradual exit from ultra-loose monetary policy. Meanwhile, the Australian Dollar remained firm following the People’s Bank of China’s (PBoC) decision to maintain its key interest rates, reinforcing stability across regional markets. Political optimism in Japan, where Takaichi is poised to become the country’s first female Prime Minister, further bolstered sentiment in Asia-Pacific currencies.

Gold Forecast (XAU/USD)

Current Price and Context

Gold traded slightly lower, slipping below the $4,250 mark as post-festive demand softened and investors took profits from recent record highs. The pullback came amid improving risk appetite in Asia and steady bond yields, although expectations for future Fed rate cuts continue to provide a floor for prices.

Key Drivers

Geopolitical Risks: Reduced global tensions eased safe-haven flows into bullion.

US Economic Data: Mixed U.S. releases last week kept traders cautious ahead of fresh updates.

FOMC Outcome: Growing expectations of a Fed rate cut later this year support long-term gold demand.

Trade Policy: Positive developments between the U.S. and China dampened risk aversion.

Monetary Policy: Dovish central bank tones globally keep gold’s medium-term bias supported.

Technical Outlook

Trend: Slight correction within a broader uptrend.

Resistance: $4,300

Support: $4,200

Forecast: Consolidation likely before renewed upside if U.S. data disappoints.

Sentiment and Catalysts

Market Sentiment: Neutral-to-bullish as investors await confirmation of Fed easing.

Catalysts: Upcoming U.S. PMI and inflation data will determine near-term direction.

Japanese Yen Forecast (USD/JPY)

Current Price and Context

The Japanese Yen steadied after BoJ’s Takata suggested Japan has “roughly achieved” its inflation target, reinforcing expectations of a potential policy normalization in the months ahead. USD/JPY hovered near 149.50 as traders weighed policy divergence with the Fed.

Key Drivers

Geopolitical Risks: Regional stability supported moderate Yen demand.

US Economic Data: A softer U.S. Dollar underpinned the Yen’s recovery momentum.

FOMC Outcome: Continued rate-cut expectations narrowed the U.S.-Japan yield gap.

Trade Policy: Stable U.S.-China relations reduced risk-driven Yen volatility.

Monetary Policy: Growing anticipation of gradual BoJ tightening boosted JPY sentiment.

Technical Outlook

Trend: Gradual strengthening bias for JPY.

Resistance: 150.00

Support: 148.20

Forecast: USD/JPY could test lower levels if BoJ delivers more hawkish hints.

Sentiment and Catalysts

Market Sentiment: Slightly bullish on Yen amid policy optimism.

Catalysts: BoJ commentary, Japan’s inflation data, and U.S. bond yield movements.

WTI Crude Oil Forecast

Current Price and Context

WTI crude remained under pressure near $57.00, weighed by concerns of persistent oversupply and cautious demand outlooks. Traders assessed OPEC+ production levels while renewed optimism in global trade failed to offset bearish fundamentals.

Key Drivers

Geopolitical Risks: Easing Middle East tensions reduced risk premiums in energy markets.

US Economic Data: Softer U.S. inventories added mixed cues for short-term direction.

FOMC Outcome: Dovish Fed expectations provide mild support via weaker USD effects.

Trade Policy: Signs of stability in U.S.-China relations could aid long-term demand recovery.

Monetary Policy: Global central banks’ easing stance indirectly supports energy prices.

Technical Outlook

Trend: Bearish below $58.00

Resistance: $58.20

Support: $56.40

Forecast: WTI may stay range-bound, with downside risk if OPEC+ fails to cut output.

Sentiment and Catalysts

Market Sentiment: Cautious amid supply overhang and limited recovery in consumption.

Catalysts: OPEC+ commentary, U.S. inventory reports, and global demand projections.

AUD/JPY Forecast

Current Price and Context

AUD/JPY climbed above the 98.00 level, underpinned by upbeat risk sentiment and political optimism in Japan. Expectations that Takaichi will become Japan’s first female Prime Minister boosted domestic stability prospects, enhancing demand for both the Yen and high-beta currencies like the Aussie.

Key Drivers

Geopolitical Risks: Political continuity in Japan supports regional market stability.

US Economic Data: A weaker U.S. Dollar encouraged broader Asia FX gains.

FOMC Outcome: Dovish U.S. policy stance remains a key tailwind for risk assets.

Trade Policy: Robust regional trade flows add strength to cross-Asian pairs.

Monetary Policy: BoJ and RBA stances drive short-term volatility across the cross.

Technical Outlook

Trend: Bullish above 97.50

Resistance: 98.40

Support: 97.80

Forecast: Room for further gains if market sentiment stays constructive.

Sentiment and Catalysts

Market Sentiment: Optimistic as Asia-Pacific risk appetite recovers.

Catalysts: Political developments in Japan and shifts in global yield differentials.

Australian Dollar Forecast (AUD/USD)

Current Price and Context

The Australian Dollar stayed firm as the PBoC’s decision to maintain lending rates supported confidence in China’s economic stability — a key factor for Australia’s trade outlook. AUD/USD traded around 0.6620 amid cautious optimism in regional markets.

Key Drivers

Geopolitical Risks: Improved trade sentiment between China and the U.S. buoyed the Aussie.

US Economic Data: Mixed U.S. indicators kept the Greenback subdued.

FOMC Outcome: Expectations of U.S. rate cuts provide additional AUD support.

Trade Policy: Positive Chinese data signals sustained demand for Australian exports.

Monetary Policy: The RBA remains steady, awaiting clearer inflation guidance.

Technical Outlook

Trend: Bullish above 0.6600

Resistance: 0.6670

Support: 0.6550

Forecast: Uptrend likely to continue if China’s growth indicators remain stable.

Sentiment and Catalysts

Market Sentiment: Positive, driven by improved China-linked confidence.

Catalysts: PBoC policy tone, Chinese data, and global commodity demand trends.

Wrap-up

Market participants now shift focus to upcoming U.S. data releases and central bank commentary for further cues on global monetary trajectories. With the Yen and Aussie showing early strength amid supportive policy developments, the broader Asia-Pacific complex may continue to outperform in the near term—particularly if risk sentiment holds steady and rate-cut expectations in the U.S. persist.

Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!