Japanese Yen and Australian Dollar Outlook: China’s Economic Data and Global Trade Headlines Take Center Stage

Date: May 19, 2025 | Source: DailyForex.pk

🇯🇵 Yen in the Spotlight as Japan’s Service Sector Faces Downward Pressure

The Japanese Yen could face fresh headwinds this week as investors assess Japan’s Tertiary Industry Index, a key gauge of service sector performance. The index is forecast to decline by 0.2% in March, down from zero growth in February. If the data comes in worse than expected, it could weigh heavily on Q1 GDP revisions and further erode confidence in a Bank of Japan (BoJ) rate hike this year.

With Japan’s services sector contributing nearly 70% to GDP, a weakening trend signals broader economic fragility. A poor showing could reduce market bets on a Q3 policy tightening, increasing downside risks for the USD/JPY pair.

📉 USD/JPY Technical Outlook: Fed Comments Could Shift Dollar Demand

Later today, several Federal Reserve officials—including Bostic, Williams, and Jefferson—are scheduled to speak, and their views on inflation, labor markets, and tariffs could impact the US dollar’s trajectory.

Bearish scenario: If Fed members support earlier rate cuts, USD/JPY may retreat toward key support at 142.35 (May 6 low).
Bullish scenario: A hawkish Fed tone or weaker Japanese data could send USD/JPY above the 50-day EMA, targeting resistance near 149.36.

Traders should also monitor any US-Japan trade negotiations, which could introduce fresh volatility.

📊 USD/JPY remains technically weak as long as price trades below the 50-day EMA.

🇦🇺 AUD/USD Hinges on China’s Economic Pulse

Australia’s dollar remains highly sensitive to Chinese macroeconomic performance. On May 19, traders will digest a fresh batch of China’s key data releases, including:

Retail sales
Industrial production
Unemployment figures

China accounts for over one-third of Australia’s exports, so any signs of slowing Chinese demand—especially under the weight of US tariffs—could hurt Australian trade balances and boost expectations for additional RBA rate cuts.

🔍 AUD/USD Forecast: What to Expect

Bearish outlook: Weak Chinese data, rising geopolitical tensions, or dovish RBA signals could pull AUD/USD toward the $0.6362 support zone and the 50-day EMA.
Bullish momentum: If Chinese numbers beat expectations or if Beijing rolls out stimulus measures, the pair could break above the 200-day EMA, eyeing a move toward $0.6500.

📈 According to AMP’s Chief Economist Shane Oliver, Australian markets are already pricing in a 96% probability of an RBA rate cut on Tuesday, with three 0.25% cuts expected by year-end.

📝 Final Thoughts: Key Market Catalysts to Watch

🔍 For USD/JPY:

Japan’s services sector performance
BoJ rate guidance
U.S. Fed commentary
Trade policy headlines

🔍 For AUD/USD:

China’s economic indicators
US-China trade negotiations
RBA interest rate expectations
U.S. monetary policy outlook

With central bank decisions, macro data, and global trade headlines aligning this week, expect heightened volatility in both USD/JPY and AUD/USD. Stay tuned to DailyForex.pk for real-time updates, forecasts, and actionable trading insights.