The AUD/JPY cross, trading at 113.39, is the standout option for investors looking to execute a carry trade that borrows low-yielding Japanese yen to finance exposure to higher-yielding currencies. Over the past 12 months the pair has climbed 18.11% - the largest gain among major JPY crosses - and technical indicators return Strong Buy readings on daily, weekly, and monthly charts.
Key technical facts underpinning the AUD/JPY case include:
- Daily RSI at 57.7, indicating healthy upward momentum with room before overbought levels.
- MACD positive at 0.120, corroborating bullish momentum.
- ADX at 28.5, which signals a developing trend that is not yet exhausted.
- The pair is trading only 1.4% below its 52-week high of 114.94.
These metrics form a clean technical setup for traditional Yen-funded carry strategies - borrowing cheap JPY to purchase a higher-yielding, commodity-linked currency such as the Australian dollar. The NZD/JPY cross, at 93.91, offers a comparable but less compelling alternative: it has returned a smaller 7.24% over one year and displays weaker trend conviction, with an ADX of just 13.0 consistent with range-bound behavior. Similarly, EUR/JPY and GBP/JPY show positive moves but lack the yield differential and raw carry appeal that commodity currencies provide.
Emerging market crosses present a mixed picture and illustrate divergent tactical choices for traders seeking higher yields beyond developed-market pairs.
- USD/MXN - trading at 17.04 and down 9.27% over one year. The pair is signaling Strong Sell across daily, weekly, and monthly timeframes. Technicals include an RSI at 29.2 (near oversold) and an ADX at 60.8, indicating a powerful downtrend that appears mature. The article notes that chasing further MXN strength risks fighting a move that has already run its course.
- USD/BRL - trading at 5.20 and down 4.44% year-over-year. Daily technicals show a Strong Buy signal, with an RSI at 59.8 and a fresh MACD crossover. This combination suggests a potential entry point for a BRL-short carry trade that could capture Brazil's high real interest rate via currency exposure.
- USD/TRY - trading at 47.92 and up 17.22% over the past year. Despite a Strong Buy signal, the Turkish lira is described as unsuitable for disciplined carry strategies: RSI readings are extreme, at 99.5 on the daily and 99.9 on the weekly, consistent with an overbought currency in structural collapse rather than a stable carry opportunity.
Additional market snapshots noted in intraday listings include small moves across major crosses such as EUR/JPY and GBP/JPY, while AUD/JPY and NZD/JPY trade with slightly negative intraday prints. These intraday variations do not alter the broader technical narratives laid out above.
On the macro front, the current backdrop is supportive of carry strategies. The article states that Fed rate hike expectations have fallen to a 35% probability for September, a shift that has softened the U.S. dollar toward levels not seen since early June. Historically, a weaker dollar environment tends to favor flows into both commodity currencies and higher-yielding emerging-market assets - the exact categories highlighted in this analysis.
Putting the pieces together, AUD/JPY emerges as the cleanest carry candidate: it combines a well-defined trend, solid momentum indicators, favorable yield differential and no clear signs of exhaustion. For traders willing to accept more risk in pursuit of higher returns, a long USD/BRL position presents attractive daily technicals and could represent a fresh entry. By contrast, USD/MXN shows signs of a mature, exhausted move and is flagged with Strong Sell readings, while USD/TRY is characterized as structurally unsound despite its high yield.
In sum, the Australian-Japanese yen pairing currently offers the most balanced risk-reward profile for classic yen-funded carry strategies, with the Brazilian real providing the most compelling emerging-market tactical opportunity. The Mexican peso and Turkish lira, however, warrant caution based on their respective technical conditions.