Key Highlights:
- 🔹 AUD/USD and NZD/USD weaken as US Dollar rallies on trade optimism
- 🔹 USD/JPY remains firm in consolidation amid BoJ caution and rising US yields
- 🔹 GENIUS Act and strong labor data reduce urgency for Fed rate cuts
Dollar Strength Pressures Aussie and Kiwi After Trade Breakthroughs
The US Dollar surged on Monday, gaining momentum after back-to-back trade agreements between the US and two major economies — the European Union and Japan. The AUD/USD pair tumbled toward 0.6500 as global risk sentiment shifted, favoring the greenback. The US-EU deal included tariff reductions and major commitments for EU purchases of US energy and defense goods, boosting demand for the Dollar while weighing on commodity-linked currencies like the Australian and New Zealand Dollars.
The NZD/USD also came under pressure, though it held its broader consolidation structure for now. Risk-off tones and increased dollar demand kept both antipodean pairs on the back foot.
USD/JPY Holds Ground with BoJ in Focus
Despite Japan’s cautious tone ahead of its upcoming monetary policy meeting, USD/JPY remains stable above 148, supported by rising US Treasury yields and subdued expectations for BoJ tightening. While hints of future BoJ hikes exist, traders do not expect immediate action on Thursday.
Strong US data—including tight labor market figures and the GENIUS Act’s liquidity measures—has kept the US Dollar attractive. The GENIUS Act’s promotion of stablecoin regulation and increased short-term T-Bill issuance has reinforced dollar strength while keeping longer-term yields in check.
Market Outlook Ahead of Key US Economic Events
- 📈 US GDP and Core PCE inflation data due this week
- 🏛️ Fed rate decision set for Wednesday (no cut expected)
- 📊 Australia’s CPI data due Wednesday — critical for AUD/USD trajectory
- 📰 Traders also eye outcomes from US-China trade talks
🔹 AUD/USD Technical Outlook: Bearish Pressure Builds
- Pattern: Ascending Broadening Wedge (4H Chart)
- Resistance: 0.6620
- Support Levels:
- Immediate: 0.6450
- Secondary: 0.6380
- Major: 0.6320
- Bias: Bearish, especially if inflation data disappoints
The Aussie remains under pressure as it fails to break 0.6620 and is now testing wedge support near 0.6450. A clean breakdown could invite a deeper retracement toward 0.6380.
🔹 NZD/USD Technical Outlook: Range-Bound but Constructive
- Range: 0.5870–0.6120
- Momentum: Neutral to bullish above 0.5870
- Bias: Cautious optimism
The Kiwi dollar remains locked in a consolidation zone, supported by prior rebounds from 0.55. The 0.6120 resistance remains key for bulls, with dips likely to find demand unless US Dollar strength persists.
🔹 USD/JPY Technical Outlook: Awaiting Breakout
- Range: 140–151
- Resistance: 148.30
- Breakout Trigger: Above 148.30 = possible surge to 151
- Bias: Neutral until breakout
USD/JPY remains in a broad consolidation phase, but rising yields and strong US data may trigger a breakout above 148.30. A sustained move above 151 would invalidate bearish setups and fuel further upside.
Bottom Line:
The US Dollar reigns supreme as new trade deals and resilient economic data lift sentiment. While the AUD and NZD retreat, USD/JPY eyes a breakout, and upcoming inflation and Fed signals could define the next big market move.
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