AUD/USD, NZD/USD, and USD/JPY Forecast: Dovish Fed Expectations Spark Volatility Across Major Pairs

Key Takeaway: Softer US economic data and growing speculation over Fed rate cuts are fueling volatility across major forex pairs. While AUD/USD and NZD/USD benefit from dollar weakness, USD/JPY faces downside pressure as yields fall.

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📉 Weaker ISM Data Triggers Dollar Selloff, Supports AUD and NZD

The US ISM Services PMI fell to 50.1 in July, missing expectations and coming dangerously close to recessionary territory. The US Dollar Index (DXY) struggled to hold above the 100.50 mark as rate cut bets for the Federal Reserve gained traction. This shift in sentiment helped both the Australian Dollar (AUD) and the New Zealand Dollar (NZD) recover against the greenback.

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🇦🇺 AUD/USD Analysis: Bullish Momentum Builds on Economic Resilience

Strong domestic data from Australia added to bullish pressure on the AUD. The S&P Services PMI rose to 54.1, and the Composite PMI increased to 53.8, signaling robust performance in both services and manufacturing. However, the RBA is expected to cut rates on August 12, which could limit the upside unless the central bank strikes a “hawkish cut” tone.

🔍 AUD/USD Technical Outlook

• Chart Pattern: Ascending Broadening Wedge (4-hour chart)
• Immediate Support: 0.6450
• Key Levels Below: 0.6380, 0.6320
• Resistance Target: 0.6700 (long-term breakout level)

The 0.6450 level is a crucial support zone. As long as this level holds, bullish momentum is expected to continue, with the Relative Strength Index (RSI) staying above 50. A move beyond 0.6700 would confirm a breakout and open room for further upside.

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🇳🇿 NZD/USD Analysis: Bullish Structure Intact Above $0.5870

The NZD/USD pair continues to show resilience, holding firmly above the $0.5870 support. This level has acted as a long-term base since the May 2025 Trump tariff lows. The formation of multiple rounding bottoms on the chart signals a developing bullish trend.

🔍 NZD/USD Technical Outlook

• Support: 0.5870
• Bullish Breakout Trigger: 0.6120
• Trend Bias: Positive, as long as price holds above 0.5870

A breakout above 0.6120 would confirm bullish continuation, potentially driving the pair higher. Any pullbacks toward 0.5870 are likely to be seen as buying opportunities, supported by USD weakness and risk-on sentiment.

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🇯🇵 USD/JPY Analysis: Range-Bound but Bearish Bias Emerges

The USD/JPY pair has been unable to maintain gains after testing the 151.00 resistance level. Falling Treasury yields, driven by weak US economic data and rising Fed rate cut expectations, have pulled the pair lower. A drop below 148.30 signals that bears may now be in control.

🔍 USD/JPY Technical Outlook

• Trading Range: 140.00 – 151.00
• Immediate Support: 142.00
• Breakdown Trigger: 140.00
• Consolidation Zone: 143.50–147.00 (orange zone)

As long as USD/JPY trades within the consolidation range, the broader trend remains unclear. However, a decisive break below 140.00 would mark a bearish shift and may lead to a sharp selloff toward deeper support zones.

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🔄 Market Outlook: All Eyes on Central Banks

• AUD/USD: Supported by strong domestic data, but faces event risk from the RBA decision on August 12
• NZD/USD: Maintains bullish structure above key support, with momentum favoring upside
• USD/JPY: Vulnerable to downside as Fed rate cut bets rise and yields fall

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