AUD/USD and NZD/USD Extend Gains on Trade Optimism, While USD/JPY Struggles at Key Resistance

Key Highlights:

• AUD/USD continues its upward streak, boosted by improved risk appetite and US Dollar weakness.
• NZD/USD tracks higher alongside the Aussie, supported by a softer greenback.
• USD/JPY faces downward pressure after repeated failures to breach the 148.30 resistance.

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AUD/USD Holds Firm as RBA Steadies Rates and Trade Sentiment Lifts Risk Appetite

The Australian Dollar maintained its bullish momentum on Wednesday, rising toward the psychological 0.6600 level. This marks four consecutive days of gains for the AUD/USD pair, supported by easing US-Japan trade tensions and fading demand for the US Dollar.

Australia’s latest jobs report showed a rise in unemployment to 4.3% and slower job creation. However, this did little to derail the AUD rally, as the broader market remains focused on declining US Dollar strength.

The Reserve Bank of Australia (RBA) left interest rates unchanged, highlighting reduced inflation expectations. July’s inflation expectations dropped to 4.7%, indicating a softening price outlook amid sustained labor market resilience.

RBA meeting minutes struck a cautious tone, with most members preferring to wait for inflation to cool before considering further rate cuts. While a minority favored immediate action due to sluggish growth, the central bank’s overall dovish lean remains intact and could weigh on the AUD in the longer run.

On the external front, mixed signals from China continue to shape the AUD’s trajectory. While industrial output shows strength, retail demand remains weak. The People’s Bank of China’s decision to hold rates steady reinforces a cautious policy stance that may limit near-term Aussie upside.

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USD/JPY Pulls Back as BoJ Expectations Grow and Political Risks Mount

The Japanese Yen edged higher as USD/JPY retreated from the key 148.30 resistance zone, with political uncertainty in Japan adding to downside pressure. Despite denials of Prime Minister Ishiba’s resignation, investor sentiment remains shaky.

The recent US-Japan trade agreement introduced new complexities. While it included a 15% US tariff and eased auto import rules, the mixed reception failed to boost the US Dollar as expected. Rising Japanese bond yields have also narrowed the yield spread between the US and Japan, favoring Yen strength.

With the Bank of Japan potentially resuming its tightening cycle following a brief pause, the JPY may continue to gain ground, especially if the US Dollar remains under broad selling pressure.

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Technical Outlook

AUD/USD – Broadening Wedge Signals Upside Potential
On the 4-hour chart, AUD/USD is forming an ascending broadening wedge pattern above the 0.64 region. A sustained break above 0.6620 would open the door for a rally toward 0.6690. This level serves as a key resistance, and a close above it would confirm bullish continuation.

NZD/USD – Channel Breakout Supports Further Gains
NZD/USD has broken out of a descending channel and is now trending higher. The 0.6120 resistance is the next critical level to watch. A confirmed break above this barrier may trigger a fresh rally, building on bullish momentum.

USD/JPY – Struggles Continue Below 148.30
USD/JPY is once again retreating after failing to clear 148.30. The pair remains trapped in a neutral zone, and further weakness in the US Dollar could lead to a break below 140. If confirmed, this would expose deeper downside levels and confirm bearish reversal signals.

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Summary
The Australian and New Zealand Dollars are benefiting from a softer US Dollar and improved global trade sentiment. Meanwhile, the Japanese Yen is gaining ground on rising domestic yields and renewed speculation about the BoJ’s policy path. With key technical levels in focus, traders should watch for breakouts or failures that could define near-term direction across these major FX pairs.

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