Australian Dollar Corrects After Weak Employment Data
The Australian Dollar (AUD) drops after the employment data but remains above support levels. The Employment Change for February showed a sharp decline of 52.8K jobs, missing the forecasted increase of 30.0K, as shown in the chart below. This drop follows January’s revised gain of 30.5K, signaling potential weakness in the labor market.
However, the unemployment rate remained steady at 4.1%, as seen in the chart below. The significant job losses increase concerns about Australia’s economic outlook. This data reinforces expectations that the Reserve Bank of Australia (RBA) may maintain a cautious approach to interest rate policy, further limiting AUD strength.
On the other hand, external factors also add to the AUD’s struggles against the US Dollar (USD). The People’s Bank of China (PBOC) kept its Loan Prime Rates unchanged, with the one-year rate at 3.10% and the five-year rate at 3.60%, as shown in the chart below. Since China is Australia’s largest trading partner, a lack of monetary easing from the PBOC reduces hopes for stronger Chinese demand. Meanwhile, the Federal Reserve reaffirmed its plan for two rate cuts in 2024 but highlighted uncertainty from Trump’s trade policies.
Moreover, the geopolitical risks and trade tensions further complicate the AUD/USD outlook. Trump’s proposed tariffs, including reciprocal measures on steel and aluminium and duties on auto imports, raise concerns about global trade disruptions. Australia’s Treasurer Jim Chalmers criticized these policies, calling them “self-defeating” and warning of economic consequences.
Additionally, Russia’s temporary pause on energy infrastructure attacks in Ukraine could ease supply concerns, potentially dampening demand for risk-sensitive currencies like the AUD. While the RBA remains cautious on rate cuts, the AUD may remain uncertain unless global risk sentiment improves or economic data shows resilience.
USD/JPY Declines as Yen Strengthens on BoJ-Fed Policy Divergence
USD/JPY continues to decline as the Japanese Yen strengthens amid a softer US Dollar. The market reacts to the divergent policy outlook between the Bank of Japan (BoJ) and the Federal Reserve. Traders anticipate a possible BoJ rate hike in 2025, supporting the Yen and pressuring USD/JPY.
Meanwhile, the BoJ maintained its short-term interest rate target within the 0.40%-0.50% range, reinforcing expectations of gradual policy tightening. Rising geopolitical risks and trade uncertainties also boost demand for the safe-haven Yen. If the USD weakens further and risk sentiment deteriorates, USD/JPY may extend its pullback toward key support levels.
AUD/USD Technical Analysis – Bullish Price Action
The 4-hour chart for AUD/USD shows that the pair is consolidating above the neckline of the rounding cup pattern at $0.6330, indicating bullish price action. This suggests a continued move toward $0.6450. The green arrow highlights where buying interest develops, suggesting that the pair will likely continue upward.
NZD/USD Technical Analysis – Resistance
The 4-hour chart for NZD/USD shows bullish price action, but the pair has hit resistance at the ascending broadening wedge pattern around the $0.58 area. The pair has started to consolidate at this level after reaching resistance. A break above $0.5830 will indicate a continued upward trend in NZD/USD.
USD/JPY Technical Analysis – Descending Channel
The 4-hour chart for USD/JPY shows that the pair is trading within a descending channel. The rebound from the support level 146.70 has reached resistance at $150.20. The pair has started to correct lower from this resistance area. If USD/JPY breaks below 146.70, the bearish trend will likely continue, pushing the pair toward $145.
Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.
