Key Highlights:
- AUD/USD eyes sharp moves on Australia’s Q2 inflation data and Fed tone.
- USD/JPY trades near key resistance amid rising US yields and BoJ uncertainty.
- Central bank divergence fuels volatility across major JPY and AUD pairs.
🇯🇵 USD/JPY Outlook: Fed Decision and BoJ Policy in Focus
BoJ Policy Preview: Will Japan Signal a 2025 Rate Hike?
The Bank of Japan (BoJ) begins its two-day policy meeting with the spotlight on how it addresses recent US-Japan trade developments and tariff risks. While markets expect the BoJ to hold rates at 0.5%, speculation grows around hawkish forward guidance amid improving domestic data.
BoJ Deputy Governor Shinichi Uchida hinted that further hikes are possible, though tariff impacts remain a concern. USD/JPY has climbed steadily, currently near 148.80, supported by rising Treasury yields and cautious BoJ messaging.
🟢 Bullish USD/JPY Scenario: Dovish BoJ tone + strong US GDP and labor data + hawkish Fed = USD/JPY rally toward 149.35–150.00
🔴 Bearish USD/JPY Scenario: Hawkish BoJ + weak US data + dovish Fed = pullback toward 200-day EMA (147.20) and potentially 50-day EMA (146.00)
🇺🇸 Fed Decision Looms: Will the Dollar Hold Its Gains?
The Federal Reserve is widely expected to hold rates steady in July. However, the real market trigger lies in Chair Powell’s press conference and any clues about potential rate cuts in September or Q4 2025.
US Q2 GDP and ADP employment data will also shape expectations:
- GDP forecast: +2.4% QoQ
- ADP forecast: +78K vs. prior 33K
A hawkish Fed stance + solid data could push USD/JPY higher.
A dovish tone + weak data would likely weigh on the greenback across the board.
🇦🇺 AUD/USD Outlook: Inflation to Steer RBA Expectations
Australia’s Q2 CPI data will be the make-or-break moment for the AUD this week. Markets anticipate a Trimmed Mean CPI of 2.7%, near the midpoint of the RBA’s 2–3% target range.
RBA Governor Michele Bullock has emphasized that sustained disinflation could open the door for an August rate cut, putting further pressure on the Aussie dollar.
🟢 Bullish AUD/USD Scenario: Hotter CPI + Beijing stimulus + US-China trade truce = test of $0.6550–0.6600
🔴 Bearish AUD/USD Scenario: Weak CPI + hawkish Fed + no China response = drop to $0.6450, possibly retesting 200-day EMA (~$0.6400)
🔎 Key Drivers to Watch Today
| Pair | Key Catalysts |
|---|---|
| USD/JPY | BoJ policy outlook, US GDP, Fed press conference |
| AUD/USD | Australia Q2 CPI, China trade signals, Fed tone |
| Both | Central bank divergence and rate differentials |
📊 Technical Snapshots
USD/JPY Daily Chart:
Still bullish above 148.00 with resistance at 149.35 and 150.00. Watch for any breakout above prior highs or rejection signals.
AUD/USD Daily Chart:
Hovering near key support at 50-day EMA. Sustained drop below 0.6450 could shift medium-term trend bearish.
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