AUD/USD, NZD/USD, and USD/JPY React to Tariff Tensions Ahead of Inflation Data

AUD/USD Consolidates Amid Global Trade Tensions

AUD/USD dropped to the 0.6550 level as the US dollar continued to rally from its long-term support of 96.50. The pair gave up early gains as market sentiment turned risk-off. Traders responded to global trade tensions with caution.

US President Donald Trump imposed a 30% tariff on imports from the EU and Mexico. This move came after earlier tariffs on Japan, South Korea, Canada, and copper imports. The protectionist stance increased demand for safe-haven currencies. As a result, the US Dollar strengthened and pressured the AUD.

However, the broader trend for the US Dollar Index remains negative. The market is reacting to the long-term support near 96.50. The actual move in the US Dollar Index will likely develop after the release of the US inflation data. A higher inflation reading could reduce the chances of Fed rate cuts in September, supporting USD strength and limiting AUD/USD recovery. The chart below shows that the annual inflation rate in the US accelerated to 2.7% in June 2025. This was the highest level since February, as businesses began passing on higher import costs stemming from newly imposed tariffs

Investors are also eyeing Australian labour market data due on Thursday. Employment figures will shape expectations for the RBA’s next move. Weak job data may renew bets for a rate cut and push AUD lower.

USD/JPY Faces Downside Risk Despite Dollar Strength

USD/JPY remains within a tight range as the Japanese Yen outperforms most G10 peers. Trade tensions and Japan’s solid economic data supported JPY strength.

Better-than-expected machine orders and tertiary activity data lifted sentiment. Traders focus on upcoming Japanese CPI figures and the BoJ policy meeting on 31 July. Media reports suggest the BoJ may raise its inflation forecast. This outlook supports the Yen and limits USD/JPY upside.

US trade policy continues to pressure market confidence. Comments from President Trump and upcoming visits by US Treasury officials add uncertainty. If trade talks worsen, safe-haven demand for JPY may rise further.

JGB yields are climbing, narrowing yield spreads with US Treasuries. This supports the Yen and tilts USD/JPY risk to the downside. The pair may continue to remain within the 142.50–148.00 range if pressure continues.

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. It is consolidating between the 0.6400 and 0.6650 levels. A break of either level will define the next move in AUD/USD. Strong demand, a sharp surge in gold prices, and the bearish trend in the USD Index all suggest bullish momentum in AUD/USD. A break above 0.6650 will likely push the pair higher.

NZD/USD Technical Analysis – Bullish Price Action

The 4-hour chart for NZD/USD shows that the pair is trading between the 0.5850 and 0.6100 levels. It is forming strong bullish price action within this range. A break above 0.6100 will initiate a strong upward trend in NZD/USD. However, a break below 0.5850 will likely push the pair lower toward the 0.5700 level.

USD/JPY Technical Analysis – Neutral Zone

The 4-hour chart for USD/JPY shows that the pair is trading within a consolidation zone. This zone, highlighted in orange on the chart, lies between the 140.00 and 151.00 levels. As long as the pair remains below 151.00, further consolidation is likely. A break below 140.00 would initiate a strong downside trend. However, a break above 151.00 would signal a bullish move in USD/JPY.