AUD/USD, NZD/USD Struggle While USD/JPY Faces Bearish Pressure

AUD/USD Struggles as US Policies and RBA Rate Cut Diverge

The Australian Dollar (AUD) remains resilient against the US Dollar (USD) despite disappointing economic data from Australia. Private Capital Expenditure declined by 0.2% quarter-on-quarter in Q4 2024, missing market forecasts of 0.8% growth, as shown in the chart below. This downturn followed a 1.6% expansion in the previous quarter. However, the AUD maintains strength, supported by remarks from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser. He expects inflationary pressures to ease but emphasizes that progress must be confirmed before policy adjustments. The tight labor market remains challenging, adding uncertainty to inflation control efforts.

On the other hand, Australia’s monthly Consumer Price Index (CPI) increased by 2.5% year-over-year in January 2025, as shown in the chart below. This data was similar to December’s figure but fell short of the expected 2.6% increase. Inflation remained elevated, marking its highest level since August. Food prices saw the biggest surge in three months, climbing 3.3% compared to 2.7% in December, driven largely by a 12.3% spike in fruit prices.

The AUD/USD pair faces headwinds as US President Donald Trump reaffirmed that tariffs on imports from Canada and Mexico will proceed after a temporary delay. Moreover, the US government is tightening restrictions on semiconductor exports to China. The PBOC took steps to maintain market stability. It injected CNY300 billion through its one-year Medium-term Lending Facility at a 2% rate. Additionally, it provided CNY318.5 billion via seven-day reverse repos at 1.50%. These measures aimed to ensure sufficient liquidity in the financial system. These actions may support the AUD from deeper losses.

USD/JPY Faces Bearish Pressure as Yen Gains on Rate Hike Bets

The Japanese Yen (JPY) gains strength as markets anticipate more rate hikes from the Bank of Japan (BOJ). Rising inflation supports this expectation. Japan’s headline Consumer Price Index (CPI) surged to 4.0% in January, approaching the 4.3% peak seen in 2023. The chart below shows the consistent increase in CPI values. On the other hand, core CPI grew at a slower pace of 2.5%, but food prices soared by 7.8% year-over-year. This signals mounting inflationary pressure, making additional rate hikes more likely. As a result, investors are shifting funds into Yen-denominated assets, boosting demand for the JPY.

The USD/JPY pair faces downside pressure as rising Japanese interest rates encourage capital repatriation. Japan remains the largest foreign holder of US Treasuries, and higher domestic yields may push Japanese investors to bring funds back home. This could drive US Treasury yields higher but weaken USD/JPY as demand for the Yen rises. If the BOJ continues tightening, the Yen could appreciate further, adding more strain on the pair. However, USD/JPY’s movement will depend on Federal Reserve policies and US economic data in the coming months.

AUD/USD Technical Analysis – Correction

The 4-hour chart for AUD/USD shows that the price is correcting lower from the resistance of an ascending broadening wedge pattern at $0.64. This correction has led the price toward the $0.63 region. This region is the neckline of an inverted head and shoulders pattern, indicating a support zone and suggesting a potential rebound in AUD/USD. However, the RSI is still declining toward the oversold level, signaling the possibility of further downside before a reversal occurs.

NZD/USD Technical Analysis – Correction

The 4-hour chart for NZD/USD shows that the pair is correcting from the resistance at $0.5770 toward the support region at $0.5660. This support is defined by the neckline of an inverted head and shoulders pattern. The RSI suggests further downside before a potential rebound. Meanwhile, forming an inverted head and shoulders within the ascending broadening wedge indicates that bullish momentum is building amid strong volatility.

USD/JPY Technical Analysis – Bearish Trend

The USD/JPY pair continues to trade under bearish pressure at the bottom of a descending channel around $149. The consistent decline without any rebound indicates strong selling momentum. However, the pair has reached the $148.60 level as daily support. A rebound from this level and a break above $152 could trigger a strong upside. However, a break below $148.60 would extend the bearish pressure on USD/JPY.