AUD/USD and NZD/USD Gain on US Dollar Weakness; USD/JPY Faces Key Support

AUD/USD Pulls Back Amid China’s Caixin Manufacturing PMI

The Australian Dollar (AUD) edged lower against the US Dollar (USD) on Tuesday, despite remaining within a broader bullish trend. The AUD/USD pair corrected following the release of Australia’s S&P Global Manufacturing PMI, which fell to 50.6 in June from 51.0 in May. The chart below shows a continuous decline in manufacturing PMI since March 2025.

This decline marked the lowest output reading since February. Moreover, the new orders fell for the first time in five months. Weak market conditions and sufficient client inventories weighed on demand. The weaker PMI reading dented confidence in the Australian economy.

However, China’s Caixin Manufacturing PMI offered some support, as shown in the chart below. It rose to 50.4 in June, up from 48.3 in May. As China is Australia’s largest trading partner, improvements in Chinese manufacturing can help stabilise the AUD sentiment.

Despite a weaker US Dollar, the Aussie struggles to regain ground. The US Dollar Index (DXY) continues to decline, trading below 97. The technical pattern in the daily chart for the US dollar index indicates bearish pressure and suggests further downside.

The US PCE inflation data came in as expected. The headline index rose 2.3% year-over-year in May, while core PCE reached 2.7%. These steady readings failed to boost USD, yet AUD/USD consolidates due to weak domestic data.

USD/JPY Awaits Direction as Market Weighs Fed and Geopolitical Risks

USD/JPY dropped after failing to break resistance near 148.30. The pair shows bearish momentum as traders weigh US policy uncertainty. The Federal Reserve’s future rate path remains unclear amid mixed inflation and political developments.

Fed officials offered cautious signals last week. Minneapolis Fed President Neel Kashkari still expects two rate cuts this year. However, Fed Chair Powell warned that tariffs could create lasting inflation, requiring careful policy consideration.

On the other hand, geopolitical risks also weigh on the US Dollar. A US intelligence report showed strikes on Iranian nuclear sites only delayed progress by months. Iran’s refusal to resume nuclear talks adds to uncertainty, capping USD/JPY gains despite a weaker yen backdrop.

Moreover, political developments in Washington add another layer of risk. President Trump’s comments about replacing Powell raise concerns about the Fed’s future independence. Market participants remain cautious ahead of key events and data.

USD/JPY continues to consolidate above 142. A break below this level could signal further downside. However, any shift in the Fed’s outlook or a geopolitical flare-up could quickly reverse the trend. Traders await clarity from upcoming US manufacturing data and central bank commentary.

AUD/USD Technical Analysis – Ascending Broadening Wedge Pattern

The 4-hour chart for AUD/USD shows that the price is trading within an ascending broadening wedge pattern. The formation of this pattern inside a larger symmetrical broadening wedge indicates intense volatility. Bearish pressure on the US Dollar Index has led to increased demand for the Australian dollar, pushing the pair higher. Key resistance is located at 0.6650, while strong support is evident at 0.6400. A break above 0.6650 would signal further upside in AUD/USD.

NZD/USD Technical Analysis – Bullish Price Action

The 4-hour chart for NZD/USD shows that the pair is approaching the resistance level at 0.6090. Multiple rounding bottoms near the 0.5850 support and repeated tests of the 0.6090 level indicate strong bullish momentum. A break above 0.6090 would likely initiate a strong upward trend in the NZD/USD pair.

USD/JPY Technical Analysis – Descending Broadening Wedge

The 4-hour chart for USD/JPY shows the formation of a descending broadening wedge pattern, with the price failing to break above 148.30. This failure has led to continued bearish momentum in the pair. Strong bearish pressure in the US Dollar Index is contributing to the negative trend in the USD/JPY exchange rate. A break below 142 would signal further downside.