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USD/JPY Price Forecast: Bulls turn cautious near 160.00 amid rising intervention risk

  • USD/JPY pauses for a breather as a fresh intervention warning helps limit JPY losses
  • Economic risks stemming from the Middle East conflict cap the JPY and support the pair.
  • The bullish USD sentiment backs the case for further gains amid a constructive setup.

The USD/JPY pair enters a bullish consolidation phase on Wednesday, oscillating in a narrow range just below the 160.00 psychological mark, or a one-month high touched during the Asian session. Verbal intervention by Japan’s Finance Minister Satsuki Katayama offers some support to the Japanese Yen (JPY), which, along with a subdued US Dollar (USD) price action, caps spot prices.

However, economic concerns stemming from the conflict in the Middle East and the effective closure of the Strait of Hormuz hold back the JPY bulls from placing aggressive bets. In contrast, the lack of breakthrough in US-Iran peace negotiations, along with hawkish US Federal Reserve (Fed), acts as a tailwind for the safe-haven US Dollar (USD) and helps limit downside for the USD/JPY pair.

From a technical perspective, this week’s move beyond the 78.6% Fibonacci retracement level of the late April-early May downswing comes on top of the recent solid bounce from the 200-day Exponential Moving Average (EMA) and favors bulls. Adding to this, the Relative Strength Index (RSI) around 61 suggests firm but not overextended upside momentum. Moreover, the Moving Average Convergence Divergence (MACD) remains in positive territory, hinting that buyers still retain control despite the proximity of recent cycle highs.

On the topside, immediate resistance is aligned with the late April swing high near 160.78, where a clear break would reopen the path toward fresh highs. On the downside, initial support is seen at the 78.6% retracement at 159.55, followed by the 61.8% level at 158.58 and the 50% retracement at 157.90. Deeper pullbacks would look to the 38.2% level at 157.22 and the 23.6% retracement at 156.38, ahead of a stronger demand area created by the 200-day EMA at 155.77 and the structural floor near 155.03.

(The technical analysis of this story was written with the help of an AI tool.)

USD/JPY daily chart

Chart Analysis USD/JPY
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EUR/USD declines as traders adopt caution on risk-off mood

  • EUR/USD depreciates as Middle East tensions drive safe-haven demand for the firm US Dollar.
  • CENTCOM announced it successfully intercepted multiple Iranian missile and drone strikes targeting Kuwait and Bahrain.
  • US Dollar remains firm as the Strait of Hormuz closure raises energy prices and inflation, keeping Fed rates higher for longer.

EUR/USD inches lower after moving little in the previous day, trading around 1.1630 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) remains firm, driven by stalled US-Iran peace negotiations and renewed tensions in the Middle East continued to underpin safe-haven demand.

US Central Command (CENTCOM) announced Tuesday that it successfully defeated a series of Iranian missile and drone strikes targeting Kuwait and Bahrain. In response to the regional aggression, US forces also executed self-defense strikes against military targets on Iran’s Qeshm Island, per ABC News.

The Strait of Hormuz closure threatens to drive energy prices higher and intensify global inflationary pressures, reinforcing expectations that the Federal Reserve (Fed) will maintain elevated interest rates for an extended period.

US ISM Manufacturing PMI climbed to 54 in May 2026, up from 52.7 in the prior two months and beating forecasts to mark the strongest factory expansion since May 2022. April JOLTS data showed Job Openings surging to a nearly two-year high of 7.6118 million alongside declining layoffs. With robust manufacturing and employment data complicating the inflation outlook, investors are now anxiously awaiting Friday’s Nonfarm Payrolls report for definitive clues on the future trajectory of monetary policy.

The Eurozone Harmonized Index of Consumer Prices (HICP) rose 3.2% year-on-year in May, ticking up from the previous 3% and matching market forecasts. This steady inflationary pressure keeps the spotlight firmly on the European Central Bank’s upcoming monetary policy decisions.

The Euro (EUR) could gain ground amid recent hawkish comments from the European Central Bank (ECB) members. ECB policymaker Olli Rehn noted that while long-term inflation expectations remain anchored, a rate move in June should be viewed as a precautionary “insurance hike.” Moreover, fellow ECB member Gediminas Simkus pointed out that inflation expectations currently mirror levels seen four years ago. He strongly emphasized the critical need for the central bank to react in a timely manner to prevent further price pressures from cementing.

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EUR/JPY Price Forecast: Declines below 186.00 amid intervention fears, but bullish vibe prevails

  • EUR/JPY edges lower to near 185.90 in Wednesday’s early European session. 
  • Japan’s Katayama said the authorities are standing ready to respond appropriately to foreign exchange.
  • The positive view for the cross remains intact above the key 100-day EMA, with bullish RSI momentum. 
  • The first upside barrier emerges at 186.10; the initial support level to watch is 185.08. 

The EUR/JPY cross trades in negative territory around 185.90 during the early European trading hours on Wednesday. The Japanese Yen (JPY) gathers strength against the Euro (EUR) as traders are on alert for intervention from Japanese officials. 

Japan’s Finance Minister Satsuki Katayama said on Wednesday that the authorities are ready to act on the foreign exchange if required, adding that she aligns with the Bank of Japan (BoJ) governor on several matters. 

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY holds a constructive bullish bias as price trades above the Bollinger middle band around and comfortably over the 100-day simple moving average (SMA), suggesting the broader uptrend remains intact. The latest Relative Strength Index (RSI) reading at 58.43 sits in positive territory without being overbought, hinting that bullish momentum persists but has not yet reached exhaustion.

On the upside, the immediate resistance level is now aligned with the Bollinger upper band near 186.10, en route to the April 29 high of 187.42. On the other hand, the mid-line around 185.08 reinforcing a nearby demand zone. The next crucial contention level is located near the 100-day SMA at 184.47 and the lower Bollinger band close to 184.07. 

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Australia Q1 GDP misses expectations: What 0.3% growth means for AUD/USD

Australia’s Gross Domestic Product (GDP) rose 0.3% QoQ in the first quarter (Q1) of 2026 compared with the 0.8% growth in the fourth quarter of 2025, the Australian Bureau of Statistics (ABS) showed on Wednesday. This reading came in weaker than the expectations of 0.5% expansion. The annual first-quarter GDP grew by 2.5%, compared with the 2.6% growth in Q4, while below the market onsensus of a 2.7% increase.

The Australia GDP report came in worse than anticipated and drags the Australian Dollar lower in an immediate reaction. The AUD/USD pair is trading at 0.7175, losing 0.04% on the day. The pair is edges lower from Monday’s closing price at 0.7180.

(This story was corrected on June 3 at 02:00 GMT to say that the annual first-quarter GDP grew by 2.5%, compared with the 2.6% growth in Q4, not the annual fourth-quarter)

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.00%-0.02%-0.05%-0.01%0.03%-0.13%0.03%
EUR-0.01%-0.04%-0.04%-0.01%0.02%-0.15%0.03%
GBP0.02%0.04%0.02%0.02%0.06%-0.12%0.06%
JPY0.05%0.04%-0.02%0.00%0.05%-0.15%0.05%
CAD0.00%0.00%-0.02%-0.01%0.04%-0.13%0.04%
AUD-0.03%-0.02%-0.06%-0.05%-0.04%-0.18%0.02%
NZD0.13%0.15%0.12%0.15%0.13%0.18%0.18%
CHF-0.03%-0.03%-0.06%-0.05%-0.04%-0.02%-0.18%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

What do Australia’s GDP data mean for the Australian Dollar?

Australia’s Gross Domestic Product (GDP) is one of the most important indicators for the Australian Dollar (AUD) because it measures the overall health and growth of the economy. The weaker-than-expected GDP data might lead markets to expect a more dovish stance from the Reserve Bank of Australia (RBA). However, if risk sentiment improves, this might help limit the Aussie losses as capital flows toward the riskier assets.

Technical Analysis: AUD/USD maintains positive outlook

Chart Analysis AUD/USD

In the daily chart, AUD/USD holds a constructive near-term bias as price trades well above the 100-day exponential moving average (EMA), suggesting the broader upswing remains supported despite recent consolidation. The Relative Strength Index (RSI) around 52 keeps a neutral-to-positive tone, hinting that bullish momentum is modest but still intact rather than overstretched.

On the downside, initial support is seen at the 100-day EMA near 0.7038, where a deeper pullback could look to re-engage dip-buying interest while that level holds. With no nearby resistance markers from the current dataset, traders may instead focus on price behavior and momentum shifts around the 0.7178 area to gauge whether the pair extends the advance or slips back toward its underlying moving-average floor.

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Australian Dollar holds losses below 0.7200 after weaker GDP data, US-Iran tensions

  • AUD/USD softens to near 0.7180 in. Wednesday’s early Asian session. 
  • Australian GDP grew 0.3% QoQ in Q1 of 2026, weaker than expected. 
  • US forces conduct strikes after Iran’s attack, CENTCOM said. 

The AUD/USD pair declines to around 0.7180 during the early Asian session on Wednesday. The Australian Dollar (AUD) weakens against the US Dollar (USD) following a downbeat domestic Gross Domestic Product (GDP) report. Traders will closely monitor the US May employment data, which will be released on Friday. 

Data released by the Australian Bureau of Statistics (ABS) on Wednesday showed that the Australian economy grew 0.3% QoQ in the first quarter (Q1) of 2026, compared to the 0.8% growth in Q4. This reading came in weaker than the 0.5% expansion expected. Meanwhile, the annual first-quarter GDP expanded by 2.5%, compared with the 2.6% growth in Q4, below the market consensus of a 2.7% increase.

The Aussie attracts some sellers in an immediate reaction to the downbeat economic data, as it might prompt markets to expect a more dovish stance from the Reserve Bank of Australia (RBA).

Elsewhere, China’s Services Purchasing Managers’ Index (PMI) improved to 54.4 in May, up from 52.6 in the previous reading, according to RatingDog on Wednesday. This figure came in stronger than the market expectations of 52.3.

Broader geopolitical uncertainties might keep traders on edge and underpin a safe-haven currency such as the Greenback. The United States Central Command (CENTCOM) said on Tuesday that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors, including Kuwait and Bahrain, while also carrying out self-defence strikes on Iran’s Qeshm Island, per ABC News.

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New Zealand Dollar firms on upbeat China PMI; snaps two day losing streak vs USD

  • NZD/USD attracts some buyers on Wednesday amid a combination of supporting factors.
  • China’s upbeat Services PMI and RBNZ’s hawkish shift benefit the Kiwi amid a softer USD.
  • Geopolitical uncertainties could limit deeper USD losses and cap further gains for the pair.

The NZD/USD pair gains some positive traction following the better-than-expected release of China’s Services PMI and climbs to the 0.5935 region during the Asian session on Wednesday. Spot prices, for now, seem to have snapped a two-day losing streak, though the upside potential seems limited amid persistent geopolitical uncertainties.

The latest data published by RatingDog showed that China’s Services PMI climbed to 54.4 in May from 52.6 in the previous month, comfortably surpassing consensus estimates for a reading of 52.3. This also marks the fastest pace of expansion in three months, which, in turn, provides a modest lift to antipodean currencies, including the Kiwi. Apart from this, the Reserve Bank of New Zealand’s (RBNZ) abrupt hawkish shift and a subdued US Dollar (USD) demand offer some support to the NZD/USD pair.

In fact, the RBNZ’s forecast strongly projects a 25 basis points (bps) rate increase at the upcoming July 8 meeting and indicated that the OCR could reach roughly 2.85% by the end of this year, implying up to three rate hikes. In contrast, traders are currently pricing in just over a 50% chance that the US Federal Reserve (Fed) will raise borrowing costs once by the end of this year. This, along with mixed signals over US-Iran peace talks, undermines the USD and contributes to the NZD/USD pair’s intraday gains.

In the latest developments surrounding the Middle East crisis, ABC News reported on Tuesday that US forces carried out self-defence strikes on Iran’s Qeshm Island and intercepted a series of Iranian missile and drone attacks targeting regional neighbors. Adding to this, US Secretary of State Marco Rubio said that Washington will not remove sanctions on Iran in exchange for a full reopening of the Strait of Hormuz, adding that any sanctions relief is conditioned on Iran giving up enriched uranium.

Meanwhile, US President Donald Trump announced the open-ended extension of the ceasefire and the continuation of a US blockade until negotiations are concluded one way or the other. This keeps geopolitical risk premium in play, which might continue to act as a tailwind for the USD and keep a lid on the NZD/USD pair. Traders now look forward to the release of the US ADP report on private-sector employment and ISM Services PMI for some impetus later during the North American session.

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GBP steadies as increased risk aversion offsets hawkish BoE tone

  • GBP/USD stays calm as a firm US Dollar draws safe-haven support from stalled US-Iran peace talks and Middle East tensions.
  • Closing the Strait of Hormuz raises energy prices and inflation, keeping Fed interest rates higher for longer.
  • BoE’s Megan Greene grew hawkish, backing faster rate hikes because response speed is as vital as size.

GBP/USD moves little following a four-day winning streak, trading around 1.3470 during the Asian hours on Wednesday. The pair steadies as the US Dollar (USD) remains firm, driven by stalled US-Iran peace negotiations and renewed tensions in the Middle East, continued to underpin safe-haven demand.

Iran launched ballistic missiles toward neighboring Kuwait and Bahrain. The United States Central Command (CENTCOM) said on Tuesday that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors, including Kuwait and Bahrain, while also carrying out self-defence strikes on Iran’s Qeshm Island, per ABC News.

A prolonged closure of the Strait of Hormuz threatens to drive energy prices higher and intensify global inflationary pressures, reinforcing expectations that the Federal Reserve (Fed) will maintain elevated interest rates for an extended period.

This higher-for-longer outlook is heavily supported by a resilient US economy, highlighted by the ISM Manufacturing PMI climbing to 54 in May 2026, up from 52.7 in the prior two months and beating forecasts to mark the strongest factory expansion since May 2022.

Further evidence of economic strength appeared in the labor market, where April JOLTS data showed Job Openings surging to a nearly two-year high of 7.6118 million alongside declining layoffs. With robust manufacturing and employment data complicating the inflation outlook, investors are now anxiously awaiting Friday’s Nonfarm Payrolls report for definitive clues on the future trajectory of monetary policy.

Bank of England (BoE) policymakers maintained a firm stance on inflation. Policymaker Megan Greene delivered hawkish remarks, signaling a growing justification for interest rate hikes and emphasizing that “the speed of the response is arguably just as important as its size.” Her comments follow statements from BoE Governor Andrew Bailey, who stressed the importance of public confidence in the central bank’s commitment to returning inflation to its 2% target.

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Canadian Dollar weakens despite higher oil prices

  • USD/CAD gains as market risk aversion leaves the Canadian Dollar flat, failing to capitalize on rising crude oil prices.
  • WTI rises as Middle East supply fears grew after Iran fired unsuccessful ballistic missiles at Kuwait and Bahrain.
  • US Dollar strengthens as the Strait of Hormuz closure raises energy prices and inflation, keeping Fed rates higher for longer.

USD/CAD edges higher after posting minor losses in the previous day, trading around 1.3850 during the Asian hours on Wednesday. The commodity-linked Canadian Dollar (CAD) fails to capitalize on rising crude oil prices as intensifying market risk aversion prompts trader caution, keeping the currency flat.

West Texas Intermediate (WTI) climbed for a third consecutive session, trading near $92.60 per barrel at the time of writing. This price surge follows a fresh escalation of hostilities in the Middle East, where Iran launched ballistic missiles toward neighboring Kuwait and Bahrain. According to ABC News, US Central Command (CENTCOM) successfully intercepted the missile and drone attacks while executing self-defense strikes on Iran’s Qeshm Island.

The threat of a prolonged closure of the Strait of Hormuz has stoked fears of a broader energy supply disruption, which could drive global inflationary pressures higher. This backdrop strongly reinforces expectations that the Federal Reserve (Fed) will maintain elevated interest rates for an extended period, supporting the US Dollar (USD). This higher-for-longer monetary outlook is heavily supported by a resilient US economy, highlighted by the May 2026 ISM Manufacturing PMI jumping to 54.0 from 52.7, beating forecasts to mark the strongest factory expansion since May 2022.

Further evidence of economic strength appeared in the labor market, where April JOLTS data showed job openings surging to a nearly two-year high of 7.61 million alongside declining layoffs. With robust manufacturing and employment data complicating the inflation outlook, investors are now anxiously awaiting Friday’s Nonfarm Payrolls report for definitive clues on the future trajectory of Fed policy.