AUD/USD, NZD/USD, and USD/JPY Analysis Amid Tariff Tensions and Weak Economic Data

AUD/USD hit a daily high on Tuesday morning as the US Dollar remained under pressure. The pair reached the psychological resistance level of $0.6500, which it has struggled to break. The weakness in the US Dollar stems from renewed US-China tensions, fresh tariff threats, and disappointing PMI data. These factors have shifted demand from the Greenback to commodity currencies like the Australian Dollar.

However, the pair dropped from $0.6500 following the release of the RBA Meeting Minutes and recent economic data. The RBA Minutes highlighted that the board considered the case stronger for a 25 basis point (bps) cut and preferred a cautious and predictable policy approach. The chart below shows Australia’s current account deficit narrowed to AUD 14.7 billion in Q1 2025, slightly better than the upwardly revised AUD 16.3 billion in Q4 2024.

On the other hand, China’s Caixin Manufacturing PMI unexpectedly contracted to 48.3 in May, down from 50.4 in April and well below the forecast of 50.6. This weak data raises concerns about slowing Chinese demand, which would directly impact Australia due to its strong trade relationship.

As a result, AUD/USD reacted negatively, slipping to intraday lows near $0.6470. The disappointing Chinese figures now pose a near-term headwind for the Australian Dollar, limiting the pair’s ability to break above the $0.6500 resistance level.

Tariff Tensions and Weak US Economic Data Support AUD/USD and Pressure USD/JPY

On Monday, Trump announced a doubling of tariffs on steel and aluminium imports starting Wednesday. This move and his claim that China breached the May 12 trade agreement added to geopolitical risk and supported AUD/USD. On the other hand, the chart below shows that the ISM Manufacturing PMI dropped to 48.5 in May 2025.

This figure missed the forecast of 49.5 and signalled a contraction in US manufacturing. The weak data further pressured the US dollar and may help AUD/USD recover toward the $0.6500 level. A break above $0.6500 may trigger a strong upside move.

Similarly, the strong bearish pressure in the US Dollar Index adds to the downside momentum in USD/JPY, which is moving toward the 140 level. These 140 zones are a long-term support level, and a break below it could trigger a substantial drop in USD/JPY.

AUD/USD Technical Analysis – Ascending Broadening Wedge Pattern

The 4-hour chart for AUD/USD shows that the pair is trading within an ascending broadening wedge pattern. Strong long-term resistance lies within the $0.65-$0.66 area, while the pair rebounds from solid support at $0.6400. Bearish pressure on the US Dollar has strengthened AUD/USD, suggesting a potential move toward the $0.66 level.

NZD/USD Technical Analysis – Positive Development

The 4-hour chart for NZD/USD shows that the pair is breaking out around the $0.6020 area. The breakout follows strong bullish price action above the $0.58 support zone. Bearish pressure on the US Dollar Index has supported the NZD, indicating positive momentum.

USD/JPY Technical Analysis – Descending Broadening Wedge

The 4-hour chart for USD/JPY shows that the pair is trading within a descending broadening wedge pattern and forming bearish price action. The failure to break above 148.30 suggests the pair is preparing for the next move to the downside. A break below the blue dotted trend line at 142 would signal a strong breakdown toward the 140 area. Moreover, a break below 140 would confirm strong bearish momentum.