AUD/USD, NZD/USD, and USD/JPY Remain Under Bearish Pressure Amid Trade Tensions

AUD/USD Faces Bearish Pressure Amid Dovish RBA and Trade Tensions

AUD/USD remains under pressure following dovish RBA meeting minutes. Policymakers emphasized downside risks, weakening confidence in the Australian economy. Despite stable Australian Retail Sales and subdued USD price action, the lack of positive momentum signals persistent bearish sentiment. The escalating US-China trade war further weighs on the Aussie, as higher tariffs could slow Chinese demand and hurt Australia’s export-driven economy.

Moreover, President Trump’s announcement to raise tariffs on Chinese imports to 20% increases market uncertainty. His stance on Mexico and Canada adds to trade concerns, affecting AUD. Despite growing expectations of a Fed rate cut, the US Dollar remains volatile. Investors fear China’s retaliation could negatively impact commodity-linked currencies, including the Aussie. The combination of trade tensions and cautious Fed policy limits any potential upside for AUD/USD.

RBA’s 25-basis-point rate cut to 4.10% reflects ongoing economic concerns. The People’s Bank of China’s supportive stance may cushion some risks, but any slowdown in China could weaken Australia’s economy. If trade tensions escalate, AUD/USD could face further losses, especially if risk sentiment deteriorates and demand for safe-haven assets rises. However, from a technical perspective, the pair has rebounded from $0.6150 but remains below $0.64. As long as the pair stays below $0.64, bearish pressure persists.

USD/JPY Struggles as Trade Tensions and Weak Data Weigh on Sentiment

USD/JPY remains under pressure as trade tensions weigh on market sentiment. Soft US economic data and tariffs on Mexico, Canada, and China limit the Dollar’s strength. The pair struggles to gain momentum but remains within the descending channel. If trading partners retaliate, risk aversion may rise, pushing investors toward safe-haven assets like the Yen. This shift could further drive USD/JPY lower.

The U.S. Dollar could regain strength if other currencies weaken in response to trade measures. A stronger Dollar would help offset tariff costs, similar to the 2018-2019 trade war. Foreign exporters will bear the tariff burden if the exchange rate adjusts, reducing the impact on U.S. consumers. However, the situation remains complex, and market reactions will depend on further policy developments.

Moreover, the U.S.’s current account balance has been in a persistent deficit over the years, as shown in the chart below. The deficit has widened significantly recently, particularly after 2020, indicating increased trade imbalances and capital outflows. This trend could influence USD/JPY, as economic risks and central bank responses shape currency movements. The pair may experience volatility as traders assess the impact of trade tensions, monetary policy shifts, and global financial stability.

AUD/USD Technical Analysis – Symmetrical Broadening Wedge

AUD/USD continues to drop after hitting strong resistance at $0.64. This resistance was determined by the ascending broadening wedge pattern, where the price came under pressure after reaching the target. Moreover, the decline was also supported by the rebound in the US Dollar last week, driven by economic uncertainties in the US.

The pair is heading downward but trades near a long-term support region. If the pair fails to break below $0.61, the possibility of another rebound higher will develop.

NZD/USD Technical Analysis – Symmetrical Broadening Wedge

The NZD/USD also drops from the resistance level of $0.5770 and remains under bearish pressure. However, the pair has reached the orange band, which has been highlighted as the long-term support region. This support region lies within the $0.55–$0.56 range and a rebound from this level is likely. A break below $0.55 will likely damage the short-term positive momentum and induce another wave of selling pressure in NZD/USD.

USD/JPY Technical Analysis – Descending Channel

The USD/JPY rebounds from the long-term support at $148.60 but fails to sustain bullish momentum and continues to trade within the descending channel. The strong resistance is at $152; if the pair fails to break above this level, it will likely decline further. The RSI remains below the mid-level, indicating the possibility of further decline in USD/JPY.