AUD/USD and NZD/USD Tumble on Employment Shock, While USD/JPY Tests Key Resistance

AUDUSD: Weak Jobs Data, RBA Dovishness, and China’s Slowdown

The Australian dollar drops after the release of Australia’s employment data. However, the pair remains in a broad consolidation zone due to the ongoing trade crisis. However, the weakness in AUD/USD is further supported by the strength in the US Dollar, which has rebounded from the strong support of 96.50 to reach the resistance of the 50-day SMA at the 99 area.

On the other hand, the RBA’s cautious tone, with three members favouring a rate cut and six voting to hold, reflects internal uncertainty and adds pressure on the Australian dollar. With markets pricing in a 90% chance of an August cut, AUD may continue to drop if inflation meets forecasts.

Moreover, Australia’s June jobs data has disappointed. Only 2,000 jobs were added, compared to the expected 20,000, with full-time employment dropping sharply.

Furthermore, the unemployment rate has increased to 4.3%, which puts pressure on the RBA to ease policy, weakening the AUD in the medium term.

On the other hand, China’s mixed economic data offers limited support to AUD. While GDP and industrial output met expectations, slowing retail sales and high debt weigh on consumer demand. As China is Australia’s largest trading partner, a weak Chinese consumer limits upside in AUD/USD.

The US inflation data remains uncertain. The chart below shows that the CPI data remains strong, reducing the chances of immediate Fed rate cuts.

However, flat PPI figures indicate subdued producer-side inflation, creating mixed policy signals that keep USD volatility elevated.

USD/JPY: Political Uncertainty and Inflation Divergence

Political uncertainty further adds pressure to the USD/JPY exchange rate. Rumors about Trump considering Powell’s dismissal led to sudden drops in USD/JPY, despite earlier gains. Though Trump denied immediate action, the market remains cautious, limiting USD/JPY’s ability to sustain a breakout.

Technically, USD/JPY is consolidating near 148 after rejecting highs around 149.20. The pair’s direction depends on the USD Index, which faces resistance near 99. If the Dollar weakens further due to political risks, USD/JPY may retreat below key support levels.

Meanwhile, AUD/USD remains range-bound between 0.64 and 0.67 levels. Any RBA rate cut or weak data from China may push it below the 0.64 level. On the other hand, a break above the 0.67 level requires either a weaker USD or surprise hawkishness from the RBA.

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 recent consolidation in AUD/USD is driven by a strong rebound in the US Dollar Index, which is rising from long-term support at 96.50 toward the 100.50 area.

This rebound in the US dollar has triggered a sharp correction in the AUD/USD exchange rate. The pair remains range-bound between the 0.64 and 0.67 levels. A break of either level will define the next directional move for AUD/USD.

NZD/USD Technical Analysis – Consolidation

The 4-hour chart for NZD/USD shows that the pair is approaching strong support at the 0.5850 level. A break below this level would signal further downside, though the support is likely to hold. The NZD/USD remains in a consolidation phase between the 0.5850 and 0.6100 levels. A break of either level will determine the next directional move. However, the short-term trend is nearing oversold conditions, suggesting a potential rebound in the pair.

USD/JPY Technical Analysis – Neutral Zone

The 4-hour chart for USD/JPY indicates that the pair is currently trading within a consolidation zone, as highlighted by the orange area on the chart. The pair has broken above the 148.30 level and is moving toward the 151 level. A break above 151 would signal a strong bullish move. Conversely, a break below 140 would indicate further downside for the USD/JPY pair. As the US Dollar Index approaches resistance at the 50-day SMA near the 99 area, the consolidation in USD/JPY may resolve to the upside.