AUD/USD, NZD/USD, and USD/JPY: Reactions to Labor Data, Fed Signals, and Safe-Haven Flows

Australia’s Labor Data and RBA Policy Weigh on AUD

AUD/USD finds resistance at $0.6390 and continues to correct after Australia’s labour data release. The chart below shows that the unemployment rate in Australia rose to 4.1% in March, slightly better than the 4.2% forecast. However, the figures remain concerning and continue to weigh on sentiment.

On the other hand, the employment change showed an increase of 32.2K, missing the expected 40K. This data added slight pressure on the AUD/USD pair, leading to a mild price correction. However, the overall trend for AUD/USD remains strong, and a break above $0.6390 would signal a bullish continuation.

The Australian dollar found temporary support from easing US tariff threats. President Trump announced exemptions for key Chinese-made tech products like smartphones, semiconductors, and solar cells. These goods impact Australia indirectly, as China is its biggest trading partner and a major consumer of its commodities. However, the relief was short-lived as markets remained cautious about further US tariff actions, especially targeting pharmaceuticals and semiconductors.

On the other hand, uncertainty around the Reserve Bank of Australia’s (RBA) rate policy added to the weakness in the Australian Dollar. The RBA’s April meeting minutes suggested no clear timeline for the next rate change. Markets expect a 25-basis point rate cut in May, with around 120 basis points of easing priced in over the next year. This dovish outlook weighs on the Australian Dollar as investors prepare for lower interest rate differentials against the USD.

US Dollar Strength and China’s Growth Shape AUD/USD Direction

Meanwhile, the US Dollar Index (DXY) rebounded to around 99.60, adding further pressure on AUD/USD. US retail sales data showed strength, with retail sales rising 1.4% in March, signalling robust consumer spending, as shown in the chart below. This followed a 0.2% gain in February, exceeding the 1.3% forecast. Additionally, comments from Fed officials reinforced a cautious stance on rate cuts, as inflation remains above the 2% target.

The chart below shows China’s solid Q1 GDP growth at 5.4% and strong industrial production at 7.7%. This strong growth offers long-term support to the Australian Dollar. However, short-term momentum remains uncertain due to weak local data, unclear rate policy, and a strong US Dollar. Despite China’s retail sales rising 5.9%, AUD/USD struggles amid global monetary policy divergence and market volatility.

AUD/USD Technical Analysis – Key Resistance

Strong volatility is observed in the 4-hour chart below. This volatility is reflected in the ascending broadening wedge pattern, where the price fluctuates within its boundaries. The price recently reached $0.6390, providing strong resistance within the wedge. However, given the bearish trend in the US dollar, rising safe-haven demand for gold (XAU), and gold printing record highs, the likelihood of an upward breakout in AUD/USD is high. A break above $0.6480 would signal a strong bullish trend in AUD/USD.

NZD/USD Technical Analysis – Breakout

The 4-hour chart for NZD/USD shows that the price has broken the key level of $0.5870 and initiated a strong rally. This rally was pushed above a major resistance, supporting a further upside. The breakout suggests that AUD/USD may also follow this momentum due to the strong correlation between AUD and NZD. The $0.5870 level has now become a strong short-term support.

USD/JPY Technical Analysis – Descending Broadening Wedge

The 4-hour chart for USD/JPY shows that the price has been consolidating within a descending broadening wedge pattern and remains under bearish pressure. Strong support holds at the $140.50 level. Safe-haven demand for the Japanese Yen, driven by global trade tensions from Trump’s tariffs and bearish pressure on the US Dollar Index, pushes the pair lower. A break below $140 would indicate strong bearish momentum in USD/JPY.