AUD/USD, NZD/USD, USD/JPY React to Fed Rate Cut Bets and US Jobs Data Miss

Fed Dovish Shift Boosts AUD/USD Momentum

The AUD/USD pair increased to the 0.6480 level on Monday. The rally came as traders bet heavily on a Fed rate cut in September. According to the CME FedWatch Tool, the chance of a cut surged to 92.2%, up from 41.2% before the jobs report. Risk sentiment improved, supporting the Australian dollar.

The July Nonfarm Payrolls report missed expectations. The US added only 73K jobs versus 110K forecasted, as shown in the chart below. Moreover, the previous months were revised sharply lower.

The chart below shows that the unemployment rate increased to 4.2%.

Traders reacted by selling the US dollar after the release of the employment data. The Dollar Index plunged over 1.4% on Friday, retreating from the 100.25 peak. Currently, the index is consolidating after this drop and looking for the next direction.

This drop in the US dollar index favours bullish momentum in AUD/USD. Moreover, the weak US data and rising rate cut expectations diminish dollar strength. As long as risk appetite holds and the Fed outlook stays dovish, AUD/USD could remain supported above 0.6450.

USD/JPY Faces Pressure Amid Fed Uncertainty

USD/JPY showed mild gains on Monday but stayed capped below 148. The pair had tested 151 last week before retreating sharply. Weak US jobs data and surging Fed cut bets continue to weigh on the dollar. Investors are cautious ahead of Tuesday’s PMI data.

The resignation of Fed Governor Adriana Kugler adds to the pressure. As a hawkish voter, her exit opens the door for a Trump nominee aligned with looser policy. This fuels concerns of deeper Fed dovishness and hurts US dollar recovery prospects.

Meanwhile, the Bank of Japan offered mixed signals. The central bank maintained a slow tightening stance but didn’t commit to clear timing for the next hike. Despite comfort with yen weakness, the lack of detail failed to support the Japanese currency.

In this environment, USD/JPY remains vulnerable. A break below 145 could trigger further downside. If US data continues to disappoint, the pair may trend lower if yen demand rises on renewed safe-haven flows.

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 and has reached strong support at the 0.6450 level. It has rebounded from this level and is now consolidating to determine its next move. A break below 0.6440 would be a bearish signal and could push the pair toward 0.6380 and 0.6320 in the short term. However, if the support at 0.6450 holds, the next move may target the 0.6600 area.

NZD/USD Technical Analysis – Bullish Price Development

The 4-hour chart for NZD/USD shows that the pair hit support at 0.5870 after the US Dollar Index rebounded toward 100.50. As the dollar index dropped following the employment data release, NZD/USD found support. As long as the 0.5870 level holds, the pair may rebound toward the 0.6050 level.

USD/JPY Technical Analysis – Neutral Zone

The 4-hour chart for USD/JPY shows that the pair is consolidating between the 140 and 151 levels. A strong rebound in the US Dollar Index pushed the pair to test resistance at 151, but it failed to break above and moved lower. A breakout from this consolidation zone will determine the next direction. A break above 151 would signal a bullish move, while a break below 140 would indicate a bearish trend.