AUD/USD, NZD/USD Climb as Fed Rate Cut Bets Rise; USD/JPY Struggles to Break Out

The US dollar remained under pressure following disappointing jobs data, with traders increasing their bets on a September rate cut by the Federal Reserve. This shift in sentiment supported risk-sensitive currencies like the Australian and New Zealand dollars, while the Japanese yen remained directionless amid mixed Bank of Japan signals.

AUD/USD Outlook: Fed Dovish Pivot Supports the Aussie

The Australian dollar rose to 0.6480 on Monday as Fed rate cut expectations soared. The CME FedWatch Tool now shows a 92.2% chance of a September rate cut, up sharply from 41.2% before Friday’s Nonfarm Payrolls report. Risk sentiment improved, providing additional support to AUD/USD.

The US economy added only 73K jobs in July, far below the 110K forecast, while May and June revisions removed 258K jobs combined. The unemployment rate rose to 4.2%, fueling fears of a softening labor market.

This sharp shift in expectations triggered a 1.4% drop in the US Dollar Index (DXY), helping AUD/USD maintain bullish momentum above 0.6450. As long as risk appetite holds and the Fed outlook remains dovish, the Aussie could stay supported in the near term.

USD/JPY Analysis: Range-Bound as Dollar Faces Dual Pressure

USD/JPY traded slightly higher on Monday but remained below 148, as mixed signals from both the Fed and BoJ kept the pair in a holding pattern. The pair had recently tested 151 before retreating sharply due to weak US jobs data and renewed expectations of Fed easing.

The surprise resignation of Fed Governor Adriana Kugler added to the dollar’s challenges, raising the likelihood of a more dovish replacement under the current administration.

Meanwhile, the Bank of Japan maintained a cautious stance, offering little clarity on the timing of its next rate move. This lack of direction, combined with political uncertainty in Japan, limited support for the yen.

If the pair breaks below the key 145.00 level, it could open the door for further downside, especially if risk sentiment deteriorates or US data continues to disappoint.

NZD/USD Technical View: Bullish Setup Above Support

The New Zealand dollar found support at 0.5870 following the US dollar’s retreat. As long as this level holds, NZD/USD could rebound toward 0.6050. The current setup reflects improved sentiment and oversold conditions in the wake of Friday’s weak US jobs report.

Technical Summary

AUD/USD is holding above the 0.6450 support within an ascending broadening wedge. A bounce from this zone could lead to a move toward 0.6600, while a break below 0.6440 may expose 0.6380 and 0.6320.
NZD/USD remains bullish as long as 0.5870 support holds. Upside targets lie near 0.6050.
USD/JPY continues to consolidate between 140 and 151. A breakout above 151 would confirm bullish momentum, while a drop below 140 would suggest a deeper correction.

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Yasher Rizwan