AUD/USD, NZD/USD, and USD/JPY Analysis: Momentum Builds Amid Trade Tensions and Mixed Data

China’s Weak Services PMI Hits AUD/USD Amid Fed and Trade Uncertainty

China’s Services PMI dropped sharply to 50.7 in April from 51.9 in March, missing expectations of 51.7, as shown in the chart below. This weaker-than-expected data signals slowing momentum in China’s service sector. Since Australia heavily relies on Chinese demand, the Australian Dollar reacted negatively. AUD/USD drops to $0.6450 during the Asian session.

This decline in the pair was due to the soft Chinese data and renewed USD strength ahead of the Federal Reserve meeting. Investors expect the Fed to hold rates steady, but markets are watching Jerome Powell’s tone. Any hint of caution or dovishness could weigh on the US dollar, but hawkishness would pressure the Australian Dollar further.

On the other hand, political developments also affect sentiment. Trump’s trade comments and Bessent’s optimism have added support to the US Dollar in the near term. Trade talks with China remain uncertain, but hopes for deals have supported the short-term trend for the US Dollar. Meanwhile, China’s Commerce Ministry is reviewing a US trade proposal, but talks with President Xi Jinping remain off the table.

Moreover, US economic data further boosted the dollar. The ISM Services PMI rose to 51.6 in April, beating expectations of 50.6, as shown in the chart below.

Moreover, New Orders rose to 52.3, and the Employment Index climbed to 49 from 46.2. This resilience in US services contrasts with China’s weakness, adding to downside pressure on AUD/USD.

US Data Strengthens Dollar While RBA Cuts and China Weigh on Aussie

However, the domestic factors limit the decline of the Australian dollar. Australian PM Anthony Albanese secured a second term and pledged fiscal discipline. His focus on cost-of-living relief and tax reforms supports consumer sentiment. Westpac’s CEO also noted stabilizing stress levels and rising demand, offering some comfort to AUD bulls.

Looking forward, NAB maintains a positive long-term AUD/USD view. The outlook hinges on a weakening USD and expected 50bps RBA rate cuts in May. However, near-term pressure may exist unless Chinese data improves or the Fed signals a dovish turn.

AUD/USD Technical Analysis – Bullish Price Development

AUD/USD shows bullish momentum within the symmetrical broadening wedge. The pair rallied sharply after a double bottom near $0.60 and reclaimed the $0.64 level. Volatility from Trump-related headlines caused sharp swings but failed to break the bullish structure. The price recently tested resistance at $0.65 and pulled back to retest at $0.6450. RSI remains near 57, showing moderate strength. A breakout above $0.6530 could extend gains, while support at $0.6450 must hold to maintain bullish momentum.

NZD/USD Technical Analysis – Symmetrical Broadening Wedge

NZD/USD broke out of a symmetrical broadening wedge and rallied above $0.5720. During a period of uncertainty, the price dipped to a significant support zone between $0.55 and $0.56. Trump-related volatility triggered sharp moves, but buyers stepped in near $0.55. The pair surged past $0.5890 and now consolidates above this level. The RSI remains stable at nearly 50, showing balanced momentum. A hold above $0.5890 may lead to a retest of $0.60, while a drop below $0.5890 could weaken the trend.

USD/JPY Technical Analysis – Descending Broadening Wedge

USD/JPY traded within a descending broadening wedge and broke out after touching support near 140. The price rebounded sharply and tested resistance near 144. RSI recovered from oversold levels and now hovers around 47, showing neutral momentum. The pair faces a key resistance at 147.50 and immediate support at 142. A break above 147.50 could extend the recovery, while failure to hold 142 may bring back downside pressure.