AUD/USD, NZD/USD, and USD/JPY Analysis: Tariff Relief and Rate Outlook Shape Currency Trends

AUD/USD Struggles Despite Positive Domestic Indicators

The Australian Dollar has been consolidating in wide ranges against the US Dollar over the past month. The chart below shows that the Westpac Consumer Confidence Index rose to 92.1 in May. This increase reversed the previous 6.0% drop in April and marked the third rise in 2025. However, AUD/USD still dropped on Monday due to the strength of the US Dollar following the trade deal between China and the United States.

Under the US-China trade deal, US tariffs on Chinese goods dropped from 145% to 30%. Moreover, China reduced tariffs on US imports from 125% to 10%. These steps reduced global risk, strengthened the US Dollar, and pressured the Australian Dollar.

On the other hand, markets have revised their expectations for Australian rate cuts. Forecasts now expect the RBA to lower rates to 3.1% by year-end. However, a 25-basis-point cut still appears likely at the next RBA meeting. In addition, weaker exports and 33 consecutive months of industry contraction continue to weigh on the Australian outlook.

The chart below shows China’s CPI and PPI readings, which indicate slowing inflation. The CPI declined by 0.1% year over year, and the PPI also fell.

Despite this slowdown, strong export growth of 8.1% supports global trade optimism. Australia’s close export ties with China mean that any weakness in Chinese demand still affects the AUD.

Moreover, the chart below shows the Ai Group Index, which highlights ongoing industrial weakness in April and points to soft domestic momentum.

USD/JPY Outlook Strengthens Amid Global Shifts

The US Dollar gained momentum after US-China talks eased trade tensions. The strength of the dollar index (DXY) has taken the index to around 101.60. The upcoming US CPI release may further support USD/JPY. The market expects headline inflation to be 0.3% MoM in April, up from -0.1%. Core CPI is also forecast at 0.3%, rising from 0.1%. If these numbers meet expectations, the chances of near-term Fed cuts may be reduced.

Last week, the Fed held rates steady at 4.25%–4.50%. However, Jerome Powell expressed concern about tariffs disrupting inflation and employment goals. His cautious tone suggested a wait-and-see policy stance, adding to the Dollar’s appeal as a safe-haven asset.

China’s narrower trade surplus with the US, from $27.6 billion in March to $20.46 billion in April, signals some success in rebalancing global trade. For Japan, this lowers regional tensions and may improve capital flows. As a result, USD/JPY could benefit from stronger Dollar flows and reduced regional uncertainty.

The currency pairs respond more to global trade developments than domestic trends. AUD/USD remains vulnerable despite positive local data, while USD/JPY may rise if US inflation strengthens and the Fed maintains its cautious stance.

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, indicating strong volatility. Following the US-China trade deal, the drop in AUD/USD found support at $0.6370, near the wedge’s lower boundary, and the pair has since rebounded. The broader outlook remains bullish, but a break above $0.6540 is needed for the bulls to regain control.

NZD/USD Technical Analysis – Positive Development

The 4-hour chart for NZD/USD shows that the pair is consolidating around the blue trendline and showing bullish momentum. A rebound from the long-term support zone of $0.55–$0.56 and a break above $0.58 indicate bullish price action. A break above $0.60 is required for the bulls to gain control.

USD/JPY Technical Analysis – Descending Broadening Wedge

The 4-hour chart for USD/JPY shows that the pair has broken above the descending broadening wedge pattern at $146.40 and initiated a move toward $151. This breakout is a positive development and signals further upside potential. A break above $151 would confirm a bullish continuation. The pair failed to break below the pivotal $140 level, reinforcing the current upward bias.