Japanese Yen and Aussie Dollar Forecasts: Trade Developments in Focus

Eco Watchers Survey to Spotlight Services Sector Sentiment

Japan’s Eco Watchers Survey and trade headlines will influence USD/JPY trends and Bank of Japan policy sentiment on Monday, May 12. Economists forecast the Eco Watchers Survey Outlook Index to rise from 45.2 in March to 45.5 in April.

Employees’ outlook toward services sector conditions could be crucial for the Bank of Japan’s policy stance. Since the services sector accounts for around 70% of Japan’s GDP, improving sentiment could signal higher employment and a pickup in wage growth. Rising wages may fuel private consumption and demand-driven inflation, supporting a more hawkish BoJ stance.

Conversely, a lower reading could temper bets on a Q3 2025 BoJ rate hike.

Markets will likely respond more to the Outlook Index than the Current Conditions Index, the latter potentially distorted by ongoing US-Japan trade tensions.

USD/JPY Daily Outlook: Watching Trade and Fed Signals

Trade developments will also influence Yen appetite. Reports of a US-China agreement could ease demand for safe haven assets, including the Yen. On Sunday, May 11, President Trump announced a trade deal with China. However, investors must wait until later today for details of the deal.

During the US session, traders should also closely monitor Fed signals. Support to hold rates steady after a robust US Jobs Report could boost US dollar demand and drive USD/JPY toward the April 10 high of 147.714. However, increasing support for multiple rate cuts, amid trade developments, may pressure the greenback, pushing USD/JPY toward 142.5.

USD/JPY: Key Scenarios to Watch

• Bearish USD/JPY Scenario: Delays to US-China trade deal details, stronger services sector-based data, or hawkish BoJ guidance may push USD/JPY lower toward 142.5.
• Bullish USD/JPY Scenario: A zero-tariff US-China trade deal, weak services sector numbers, or a dovish BoJ stance could send the pair above the 50-day EMA toward the April 10 high of 147.714.

See today’s full USD/JPY forecast with chart setups and trade ideas.

AUD/USD in Focus: US-China Trade Headlines and RBA Bets

Shifting focus to the Aussie dollar, the reports of a US-China trade deal will influence AUD/USD trends ahead of crucial Aussie labor market data on May 15.

A zero-tariff trade agreement may lift risk appetite and support the AUD, as removing tariffs could fuel demand for Chinese goods. With nearly a third of Australian exports heading to China, stronger trade could ease expectations of multiple 2025 RBA rate cuts. On the other hand, a high-tariff deal could raise concerns about China’s economy, weighing on the AUD/USD pair.

American author and philanthropist Dmitri Alperovitch remarked on the impact of tariffs on China’s economy, stating:

“Behind closed doors, Chinese officials have grown increasingly alarmed about tariffs’ impact on the economy and the risk of isolation as China’s trading partners have started negotiating deals with Washington.”

AUD/USD: Key Scenarios to Watch

• Bearish Aussie dollar Scenario: A high-tariff trade deal or dovish RBA rhetoric may send AUD/USD toward the $0.63623 support level.
• Bullish Aussie dollar Scenario: A zero-tariff agreement, Beijing stimulus, or hawkish RBA signals could drive the pair toward the $0.65 mark.

Click here for a more comprehensive analysis of AUD/USD trends and trade data insights.

Aussie Dollar Daily Outlook: Will the Fed Signal Rate Cuts?

Later today, Fed speakers could affect US-Aussie rate differentials. Hawkish signals supporting a near-term pause on rate cuts may widen the rate differential. Easing bets in Fed rate cuts may pull the AUD/USD pair below the 200-day EMA. A fall through the 200-day EMA would bring the 0.63623 support level into play.

However, rising support for a June Fed rate cut may narrow the rate differential in favor of the Aussie dollar. A more dovish Fed stance could drive AUD/USD toward $0.65.

Key Market Drivers to Watch Today:

• USD/JPY: US-Japan trade talks, Eco Watchers Survey, and BoJ commentary.
• USD/JPY and AUD/USD: Fed forward guidance and global trade developments.
• AUD/USD: US-China trade headlines, RBA signals, and Beijing stimulus-related news.

For more in-depth analysis, review today’s USD/JPY and AUD/USD trading setups in our latest reports.