AUD/USD, NZD/USD, USD/JPY Analysis Amid US Tariff Uncertainty and Central Bank Cues

AUD/USD Holds Range Amid Strong Australian Data and US Dollar Strength

The AUD/USD pair consolidates within the ranges after the improved Australian data and optimism over Chinese stimulus. Australia’s Manufacturing PMI rose to 52.6 in March from 50.4, while the Services PMI climbed to 51.2 from 50.8. As seen in the chart below, these improvements pushed the Composite PMI to 51.3, reflecting modest expansion across key sectors. Stronger domestic data and China’s pledge to boost consumption lifted sentiment around the Australian economy.

Despite these tailwinds, AUD/USD faced downward pressure as the US Dollar Index rebounded from the 103.50 support level following better-than-expected services data. The S&P Global US Services PMI jumped to 54.3 in March, up sharply from 51.0 in February and exceeding expectations of 50.8. This three-month high in services activity offset weakness in manufacturing, which fell to 49.8. As a result, the Composite PMI rose to 53.5, the highest since December 2024, as shown in the chart below. This signals broad-based US economic resilience and supports the US Dollar.

However, uncertainty around US trade policy under President Trump limits the upside for the Greenback. His proposed 25% tariff on countries importing Venezuelan oil and hints of broader trade actions have introduced market caution. Meanwhile, the Reserve Bank of Australia will likely hold rates in April after it cut them in February, reflecting a wait-and-see approach. The risk-sensitive AUD may remain volatile if US tariffs create broader global risks.

BoJ Hawkish Shift Supports Yen, But US Dollar Strength Dominates

The USD/JPY pair remains supported near 151.00 after the Yen briefly touched a three-week low in early Asian trading. The pair benefits from stronger US data, including the S&P Global Composite PMI rising to 53.5 in March from 51.6 and the Services PMI jumping to 54.3 from 51.0. These figures signal robust US economic activity and strengthen the US Dollar. In contrast, Japan’s narrowing rate differential and hawkish Bank of Japan (BoJ) minutes have helped the Yen recover slightly, preventing a deeper decline.

The BoJ minutes showed that policymakers discussed the conditions for further rate hikes, suggesting a possible shift in policy. Governor Ueda also emphasized adjusting monetary easing if inflation remains above target. This development supports JPY sentiment. However, it is partially offset by a broader risk-on mood. Optimism around Trump’s softened tariff plans, a possible ceasefire in Ukraine, and Chinese stimulus efforts contribute to this positive sentiment. At the same time, the Federal Reserve is expected to cut interest rates later this year. Markets are currently pricing in three rate cuts. As a result, the policy divergence between the Fed and the BoJ may begin to narrow. Nevertheless, until that happens, USD/JPY could remain elevated. This is especially likely if risk appetite stays strong and US economic data continues to outperform.

Japan’s Low Rates vs. Inflation Signal Potential BoJ Hikes

The chart below illustrates that the Bank of Japan’s overnight interest rate remains significantly lower than the country’s inflation rate, currently at just 0.5%. Meanwhile, rising yields on 2-year Japanese Government Bonds (JGBs) suggest potential for further rate hikes. Although the 2-year JGB yield remains well below the 2-year US Treasury yield, which stands at 4.28%, any gap narrowing could trigger capital outflows from Japan’s $1.08 trillion holdings in US Treasuries. These outflows may intensify if the Trump administration includes Japan in its planned tariff measures on April 2.

AUD/USD Technical Analysis – Bullish Price Action

The 4-hour chart for AUD/USD shows that the pair is trading within a sideways market. The wide consolidation range reflects strong volatility. This pattern indicates price uncertainty for AUD/USD. However, a break above $0.6450 is required for the bulls to regain control.

NZD/USD Technical Analysis – Resistance

The 4-hour chart for NZD/USD shows consolidation within a symmetrical wedge pattern. This consolidation highlights strong volatility, and traders must push the price above $0.58 to confirm further upside.

USD/JPY Technical Analysis – Descending Channel

The 4-hour chart for USD/JPY shows that the pair has broken above the $150.20 level and reached the resistance at $151. A break above $151 is needed for USD/JPY to continue its upward momentum. The emergence of an inverted head and shoulders pattern also suggests further upside potential.