AUD/USD, NZD/USD, and USD/JPY: Key Levels Indicate Diverging Trends Among Major Pairs

n this article, we explore the contrasting trends across AUD/USD, NZD/USD, and USD/JPY. While AUD/USD faces downward pressure due to geopolitical uncertainties and rising US yields, NZD/USD maintains a bullish setup above 0.5870. Meanwhile, USD/JPY appears to be facing downside risks as it forms a head and shoulders pattern below the key 151 level.

AUD/USD Faces Pressure Amid Strong US Dollar and Geopolitical Risks

The Australian Dollar (AUD) has been under pressure this week, struggling to break above the critical 0.6550 level. This weakness is driven by a combination of factors, including the robust performance of the US Dollar, bolstered by firmer Treasury yields. Additionally, growing uncertainty surrounding the upcoming Trump-Zelenskyy summit has further weighed on the pair.

The US Dollar Index has recovered to near 98, after dropping to a two-week low last week. The recovery of the Greenback has been supported by rising yields and increased safe-haven demand, although expectations for a Federal Reserve (Fed) rate cut in September have kept the dollar’s gains in check. The delicate balance between risk aversion and anticipated policy easing is influencing USD flows.

Geopolitical tensions remain a significant driver for AUD/USD. The meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy, along with European leaders, raised uncertainty in the markets. The shift from ceasefire talks to long-term security planning has sparked hopes for stability, but the market remains cautious.

The Reserve Bank of Australia (RBA) cut rates to 3.60%, with a focus on weak productivity and lower consumption. While the GDP forecast has been revised down, the possibility of further easing remains on the table, contributing to the bearish sentiment surrounding the Australian Dollar. Although employment data showed resilience with a stable unemployment rate and an increase in full-time jobs, it wasn’t enough to offset the negative impact of weak consumption.

AUD/USD Technical Analysis – Price Uncertainty

The 4-hour chart for AUD/USD shows ongoing consolidation below the 0.6550 level, reflecting market indecision. Immediate support lies at 0.6440, and a break below this could push the pair toward 0.6380 and 0.6320. If the pair fails to break above 0.6550, bearish pressure will persist, and a move below 0.6320 would confirm further downside potential. However, if the price breaks above 0.6550, it would signal short-term bullish momentum and potentially lead to additional upside toward the 0.6720 region.

On the daily chart, the price has been fluctuating significantly, rebounding from long-term support at 0.6170. The recent move below the 50-day Simple Moving Average (SMA) but above the 200-day SMA adds to the uncertainty. A break below the 200-day SMA at 0.6390 would likely trigger further downside.

NZD/USD – Bullish Outlook Above Key Support

In contrast, NZD/USD is showing a positive price structure above the 0.5870 support level. The pair is currently consolidating in a tight range as it looks for the next directional move. However, the strong rebound from long-term support at 0.5560 and the sustained strength above 0.5870 suggest that the pair is poised for an upward move.

A break above 0.5970 could open the path towards 0.6140, and further gains could follow, depending on broader market sentiment. The technical setup remains bullish, supported by the ongoing strength above the key support level of 0.5870.

USD/JPY – Bearish Head and Shoulders Pattern

USD/JPY is showing signs of weakness, forming a head and shoulders pattern below the critical 151 resistance level. The pair has been consolidating above the red trendline, but negative price action is apparent below 148.30. A break below 146.30 would likely trigger a sharp drop toward the 142 level.

Overall, USD/JPY continues to trade within a long-term consolidation zone between 140 and 151. The formation of the head and shoulders pattern suggests downside risks in the near term, with a potential decline to lower levels if the pattern plays out.

Conclusion: Diverging Trends Among Major Currency Pairs

• AUD/USD: Pressure continues due to a stronger USD, rising US yields, and geopolitical risks. Key support at 0.6440 and 0.6320 will dictate the next move.
• NZD/USD: Bullish setup remains intact, with the pair holding above 0.5870. A break above 0.5970 could lead to further upside.
• USD/JPY: Bearish momentum is building, with a head and shoulders pattern signaling potential downside risk below 146.30.

Keep an eye on key events such as the upcoming Federal Reserve and RBNZ meetings, as well as geopolitical developments, which are likely to influence these currency pairs in the short to medium term.

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