AUD/JPY Strategy: Trading the 108.00 Pivot Amid Hawkish BoJ Bias

The AUD/JPY pair closed the most recent liquid session with a notably heavy profile, finishing at 107.42 after failing to sustain momentum above the critical 108.00 psychological level. As we transition into the January 24, 2026 session, market participants are closely monitoring the rate-differential sensitivity following recent hawkish signals from the Bank of Japan.

Technical Landscape: The 108.00 Pivot Regime

The disciplined interpretation of Friday's price action indicates a bearish bias heading into the new week. With the pair closing -0.86% lower, the 108.00 level now acts as a primary regime filter. As long as price remains below this pivot, rallies are likely to be met with selling pressure. Conversely, a reclaim of this level would invalidate the immediate bearish thesis and shift the focus back toward the 109.00 resistance ladder.

Key Price Levels to Watch

• Pivot Point: 108.00
• Psychological Magnet: 107.00
• Resistance Ladder: 109.00 → 109.50 → 110.25
• Support Ladder: 107.25 → 106.75 → 106.00

Session Handover and Execution Markers

For traders navigating the cross-continental liquidity handovers, specific timing markers provide the highest quality information regarding trend sustainability versus mean reversion:

• 06:35 London: Initial impulse and range definition. Watch for the first attempt to challenge the 108.00 pivot.
• 12:20 London: Price discovery phase. Evaluate the quality of retests at the London-defined boundaries.
• 11:25 New York: The final decision window. New York liquidity will confirm whether the market is in a trend-extension mode or rotational range mode.

Market Scenarios for the Next Session

Based on current volatility and flow dynamics, we have mapped out three primary scenarios for the upcoming sessions:

1. Base Case: Rotational Range (60% Probability)

Price oscillates between the 107.25 support and 109.00 resistance. Traders should prioritize mean reversion tactics near the boundaries, treating the 108.00 pivot as a central point of gravity.

2. Upside Case: Bullish Acceptance (20% Probability)

A sustained break and acceptance above 109.00 targets the 109.50 and 110.25 levels. This scenario requires a fundamental shift in risk appetite or a cooling of JPY strength. Invalidation occurs on a loss of the 108.00 pivot.

3. Downside Case: Bearish Extension (20% Probability)

Acceptance below the 107.25 mark opens the door for a test of 106.75 and potentially the 106.00 figure. This move would likely be driven by continued hawkishness from the BoJ or a sharp decline in commodity-linked beta.

For further context on the Japanese Yen's current macro environment, see our analysis on the BoJ 0.75% Rate Hold and Hawkish Forecasts.

Risk Management and Implementation

In the current high-volatility regime, risk sizing is paramount. If the realized range continues to expand, traders should consider reducing leverage and widening stop-loss orders to account for larger swings. The implementation rule remains consistent: treat the first break as noise/signal and the retest as the high-probability trade opportunity.

Related Reading

• AUD/JPY Strategy: Trading the 108.50 Pivot Amid BoJ Sensitivity
• Japan December CPI Slows to 2.4% as Underlying Inflation Stays Sticky