AUD/USD, NZD/USD, USD/JPY React to US Trade Deals and Dollar Rally

The US-EU trade deal has strengthened the US Dollar, pushing AUD/USD sharply lower. The pair dropped near 0.6500 as the market digested news of reduced US tariffs on EU imports. This tariff reduction calmed global trade fears but boosted the US Dollar across the board. As a result, risk-sensitive currencies, such as the Australian Dollar, came under pressure. Moreover, the demand for the Dollar surged as the trade deal included commitments for EU purchases of US natural gas and military goods.

On the other hand, the US-Japan trade frameworks also supported the USD/JPY‘s higher levels. The Bank of Japan remains cautious despite hinting at future rate hikes. Markets do not expect any immediate change from the BoJ’s Thursday policy meeting. With no short-term tightening expected, the Japanese Yen remains weak. As a result, USD/JPY is likely to stay supported, especially if Fed Chair Powell signals confidence in the US economy and delays any rate cuts.

One of the reasons for support in USDJPY is the rising US Treasury yields and safe-haven outflows from the Yen. Investors now await key US data, including PCE and GDP, along with the Fed’s policy decision.

The chart below shows that the financial conditions remain loose, with the Chicago Fed index dropping to its lowest level in over three years.

Moreover, the labour market stays strong, with unemployment at just 4.1%.

The GENIUS Act, signed by President Trump, adds more liquidity by supporting stablecoin regulation and boosting short-term T-Bill issuance. This reduces upward pressure on long-term yields and limits the Fed’s ability to control monetary policy. As a result, the Fed is unlikely to cut rates on Wednesday unless political pressure mounts.

AUD/USD Technical Analysis – Ascending Broadening Wedge

The 4-hour chart for AUD/USD shows that the price failed to break above the 0.6620 resistance level and began a substantial decline as the US Dollar Index rebounded sharply from the long-term support near 96.

The pair is now approaching immediate support near the ascending broadening wedge at 0.6450. A break below this level would suggest further downside toward the 0.6380 area.

More substantial support lies at 0.6320, where a potential rebound could occur. As long as the U.S. dollar maintains bullish momentum driven by trade optimism, AUD/USD may remain under pressure unless key support levels hold. Australia’s inflation data release on Wednesday may drive the pair’s next direction.

NZD/USD Technical Analysis – Consolidation

The 4-hour chart for NZD/USD shows that the pair is consolidating between the 0.5870 and 0.6120 levels. The strong rebound from the long-term support near 0.55, following President Trump’s tariff announcement, has triggered a bullish price action.

Any pullback in NZD/USD due to a strong rebound in the US Dollar Index is likely to find support and may lead to another upward move toward 0.6120.

USD/JPY Technical Analysis – Consolidation 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 U.S. Dollar Index is pushing the pair toward a breakout above the 148.30 resistance.

A break above 148.30 could drive USD/JPY toward the 151 level. A sustained move above 151 would ease bearish pressure and potentially trigger a stronger rally. The pair remains in a consolidation zone between 140 and 151, and a breakout above or below this range is needed to determine the next directional move.