AUD/USD, NZD/USD, and USD/JPY Analysis: Inflation, Trade Uncertainty, and Technical Patterns

Aussie Dollar Pressured by Weak Trade Data and China Slowdown

The Australian Dollar continued to weaken against the US Dollar for the second consecutive day despite a softer US inflation reading. The AUD/USD pair struggled to recover, even as headline CPI came in cooler than expected at 2.4% YoY. Core CPI also eased to 2.8%, fueling expectations of a Fed rate cut in September. However, the Australian Dollar failed to capitalize on the Greenback’s weakness.

This weakness in the Australian Dollar is partly due to local trade data, which added pressure to the currency. The April trade surplus narrowed to 5,413M, below the expected 6,100M and down from 6,892M in March. Moreover, exports decreased while imports increased, pointing to a weaker trade performance. These figures suggest softening external demand from key partner China, which could weigh on the Australian economy.

China’s latest trade data showed a mixed picture. The May trade surplus widened to USD 103.22 billion, but export growth slowed to 4.8%, while imports dropped by 3.4%. The slowdown in Chinese trade activity raises concerns for the AUD, given Australia’s heavy trade exposure to China. Limited upside in Chinese demand could continue to cap any strength in the Australian Dollar.

Geopolitical risks also cloud sentiment for the Australian dollar. Tensions in the Middle East have escalated, with the US advising citizens to leave the region and signaling that Israel may launch a strike on Iran. These developments have created uncertainty in the AUD/USD pair.

Soft US Inflation and Trade Uncertainty Weigh on USD/JPY

The US Dollar Index trades near 98.30, marking its second consecutive day of decline. The dollar’s weakness is linked to May’s soft inflation data, which has increased the likelihood of the Fed easing later this year. Meanwhile, the USD/JPY pair remains under pressure due to a lack of bullish momentum, retreating from the 145 resistance level.

With inflation coming in below forecasts and the Fed likely to maintain a dovish stance, USD/JPY could face continued selling pressure. A break below 142 would signal a deeper downside, mainly if risk sentiment stays fragile.

Moreover, President Trump recently stated that the US-China trade deal is ‘done,’ pending final approval. However, ongoing uncertainties regarding tariffs continue to induce volatility in the AUD/USD and USD/JPY pairs. The US federal appeals court has allowed existing tariffs to remain in place during ongoing legal challenges, which could impact market sentiment and increase demand for safe-haven assets.

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. The support of this pattern lies at 0.6430, while resistance is near the 0.66 area. As long as the pair remains above 0.6430, it is likely to continue moving higher.

NZD/USD Technical Analysis – Bullish Price Action

The 4-hour chart for NZD/USD shows that the pair is consolidating above the 0.6020 area. The emergence of bullish price action from the 0.5500 level, followed by the formation of a cup pattern above the 0.5850 area, suggests a strengthening of bullish momentum. The current correction in NZD/USD is likely to be viewed as a buying opportunity.

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. Multiple rebounds from the 142 level have encountered strong resistance at the upper boundary of the wedge. The pair began to decline after the release of the US CPI data and is now moving toward 142. However, based on the bearish price action, a break below 142 could initiate a move toward the 140 area.