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Australian Dollar steadies vs Japanese Yen as CPI cools, BoJ hawks

  • AUD/JPY experiences volatility amid cooling Australian inflation.
  • Australia’s annual CPI rose 4.0% while monthly prices fell 0.7%, both slowing much faster than markets expected.
  • JPY defense prompts government intervention and rate hike momentum, highlighting building pressures for a tighter monetary policy.

AUD/JPY remains steady after six days of losses, trading around 0.6920 during the Asian hours on Wednesday. The currency cross moves little as the Australian Dollar (AUD) experiences minor volatility following the release of Australia’s Consumer Price Index (CPI) data.

Australian inflation slowed more than anticipated in May, offering some relief to policymakers. According to the Australian Bureau of Statistics, the annual Consumer Price Index (CPI) rose by 4.0% year-over-year, down from 4.2% in the previous month and lower than the 4.4% market consensus. On a monthly basis, consumer prices actually fell by 0.7%, a sharp reversal from the prior month’s 0.4% increase and a softer reading than the forecasted 0.3% decline. Meanwhile, the Reserve Bank of Australia’s (RBA) preferred core inflation metric, the Trimmed Mean CPI, ticked up 0.4% for the month and rose 3.6% on an annual basis.

Over in Japan, momentum is building for tighter monetary policy just as government officials step up warnings to protect a weakening Japanese Yen (JPY). Japan’s Chief Cabinet Secretary Minoru Kihara stated that authorities will take appropriate action against excessive foreign exchange volatility if necessary. This stance was underscored by a high-level call between Japanese Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent, keeping the market on high alert for official Yen-buying operations.

The Bank of Japan’s (BoJ) Summary of Opinions from its June meeting showed that a majority of board members supported raising the policy interest rate, noting that inflation risks are broadening and the underlying CPI is sustainably approaching its 2% target.

As a result of these conflicting forces, the upside for the AUD/JPY cross remains firmly capped. The combination of cooling Australian inflation, which dampens the need for higher RBA rate hikes, and heightened fears of direct currency intervention by Japanese authorities has prompted traders to handle the currency cross with extreme caution.

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Australian Dollar falls despite improved S&P Global PMI data

  • AUD/USD loses ground despite improved Australian preliminary S&P Global PMI data.
  • Australia’s preliminary June Manufacturing PMI rose to 51.2, while Services PMI climbed to 49.9, signaling economic stabilization.
  • The US Dollar holds ground amid a hawkish sentiment surrounding the Fed policy outlook.

AUD/USD extends its losses for the sixth consecutive day, trading around 0.6980 during the Asian hours on Tuesday. The pair remains subdued despite the release of improved preliminary Australian S&P Global Purchasing Managers Index (PMI) data. Traders’ attention is shifted toward domestic inflation and jobs data due later this week.

S&P Global showed on Tuesday that the preliminary reading of Australia’s S&P Global Manufacturing PMI rose to 51.2 in June versus 50.7 in the prior. Meanwhile, Services PMI climbed to 49.9 in June from the previous reading of 48.7, while the Composite PMI jumped to 49.8 in June versus 48.7 prior.

The AUD/USD pair falls as the US Dollar (USD) gains on a hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. The updated economic projections and commentary from Kevin Warsh, presiding over his first meeting as Fed Chair, surprised the market by leaning more hawkish than anticipated. As a result, futures traders have fully priced in a 25-basis-point rate hike for the September meeting, with some pricing in a minor probability of a tightening move as early as next month.

However, the Greenback may struggle amid easing risk aversion attributed to the ongoing peace talks between the US and Iran, which helped ease concerns about inflation. CNBC reported on Tuesday that US Vice President JD Vance noted that negotiations have made “great progress,” despite some underlying friction.

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AUD/JPY Price – Holds losses below 113.00 on intervention fears, bias stays mildly bullish

  • AUD/JPY attracts some sellers near 112.75 in Tuesday’s early European session. 
  • The cross keeps a mildly bullish vibe, but further consolidation cannot be ruled out with RSI holding below the midline. 
  • The first upside barrier emerges at 113.40; the initial support level to watch is 112.70.  

The AUD/JPY cross trades in negative territory around 112.75 during the early European trading hours on Tuesday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) as traders are on high alert for currency intervention from Japanese authorities. Japan’s Chief Cabinet Secretary Minoru Kihara said on Tuesday that he will take appropriate action against the foreign exchange moves if needed. 

On the other hand, a hawkish interest rate hold from the Reserve Bank of Australia (RBA) might underpin the Aussie. The Australian central bank decided to leave the Official Cash Rate (OCR) unchanged at 4.35% after its June monetary policy meeting last week. Despite pausing the interest rates, the board members signaled that further rate hikes might be necessary to achieve its goals.

Chart Analysis AUD/JPY

Technical Analysis:

In the daily chart, AUD/JPY retains a mildly constructive bias while it holds above the 100-day Simple Moving Average (SMA) and the lower Bollinger Band, suggesting underlying demand remains in place despite the recent pullback from the highs. The Relative Strength Index (RSI) at 43.6 leans slightly bearish but not oversold, hinting more at consolidation than a decisive reversal as price oscillates within the upper half of its broader Bollinger envelope.

On the topside, initial resistance is aligned with the Bollinger middle band at 113.40, and a sustained break above this area would open the door for a retest of the upper Bollinger Band around 114.78. On the downside, the immediate focus is on the 100-day SMA at 112.20 ahead of the lower Bollinger Band at 112.00, where buyers would be expected to show more interest if the pullback deepens.

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Australian Dollar remains weak near 0.7000 on Middle East peace doubts

  • AUD/USD softens to around 0.7005 in Monday’s early European session. 
  • Uncertainty clouded the US-Iran peace deal following threats from Trump. 
  • RBA hawkish pause could underpin the Aussie. 

The AUD/USD pair loses traction to near 0.7005 during the early European trading hours on Monday, pressured by risk-off sentiment. Traders continue to assess the developments surrounding the US-Iran peace deal following fresh threats from US President Donald Trump. 

The US-Iran peace talks took place on Sunday in Bürgenstock, Switzerland, with delegations from Iran, the US, Qatar, and Pakistan participating. On Monday, Qatar and Pakistan issued a joint statement on the conclusion of negotiations, saying that talks were conducted in a positive, constructive atmosphere.

Earlier on Monday, the Tasnim news agency cited an Iranian Foreign Ministry spokesman as saying that “a formal transit mechanism was successfully arranged to guarantee the safe passage of commercial vessels through the vital Strait of Hormuz waterway.”

However, markets remain cautious since Trump over the weekend threatened strikes on Iran if Hezbollah keeps attacking Israel. Uncertainty surrounding the US-Iran peace agreement could weigh on the riskier asset, such as the Australian Dollar (AUD) against the US Dollar (USD). 

On the other hand, a hawkish interest rate hold from the Reserve Bank of Australia (RBA) might help limit the Aussie’s losses. The RBA decided to leave the Official Cash Rate (OCR) unchanged at 4.35% after its June monetary policy meeting last week. This is a pause following three consecutive 25 basis points (bps) rate hikes earlier this year. 

Despite leaving the interest rate unchanged, the board members signaled that further rate hikes might be necessary to achieve its goals.

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The Australian Dollar looks for an excuse to break ranks

  • AUD/USD was knocked lower this week as a hawkish FOMC powered the US Dollar broadly higher.
  • The RBA held this month, with above-target inflation keeping a further hike on the table.
  • Wednesday’s Australian CPI is the Aussie’s best chance to trade on something other than the Dollar.

The Australian Dollar spent this week as a passenger in someone else’s trade. A hawkish Federal Open Market Committee (FOMC) and a surging US Dollar dragged the Aussie down to the 0.7000 handle, with the pair’s sharp mid-week drop owing more to events in Washington than to anything out of Canberra. Yet the Aussie is not quite the pure risk-proxy it tends to get treated as. It carries a domestic inflation problem of its own; next week hands it a rare chance to trade on that rather than on the Greenback’s momentum.

The RBA is not done being hawkish

The Reserve Bank of Australia (RBA) left its cash rate unchanged at 4.35% this month, yet struck a far-from-dovish tone. Policymakers flagged that inflation remains elevated and has picked up materially, driven in part by higher fuel and commodity prices tied to the Middle East conflict, with pass-through into goods and services already visible. Several desks still see scope for additional tightening before any easing cycle begins; the central bank’s own projections keep inflation above target into 2027. That is a meaningfully firmer footing than most of the Aussie’s peers can claim.

Why the carry can’t catch a bid

None of that has been enough to lift the currency, because the Aussie answers to more than its own rate story. It trades as a liquid proxy for both risk appetite and China, neither of which has helped: a stronger Dollar saps risk sentiment, while soft Chinese demand and a heavy Iron Ore market cap any rebound in Australia’s terms of trade. The result is a currency with real domestic inflation pressure that still cannot pull away from the 0.7000 handle. As long as the Dollar owns the tape, the Aussie’s better fundamentals stay academic.

Two home prints, then the Dollar

Next week finally gives the Aussie a domestic slate to trade. Australia’s monthly Consumer Price Index (CPI) for May lands on Wednesday at 01:30 GMT, with the annual rate seen ticking up to 4.3% and the trimmed mean, the RBA’s preferred core measure, in focus; a hot reading would revive hike bets and hand the currency a genuinely idiosyncratic reason to firm, even against a strong Dollar.

The May employment report follows on Thursday in the same early slot, after the prior month’s surprise contraction in jobs; a rebound would reinforce the hawkish case. The complication is timing: that jobs print lands the same day the US delivers its first-quarter Gross Domestic Product (GDP) third estimate and the May Personal Consumption Expenditures Price Index (PCE) at 12:30 GMT. A firm Australian double-header into a hot US PCE would leave the Aussie pulled in both directions; the Dollar leg usually wins that tug-of-war.

Resistance: The 0.7050 level is the first hurdle, with the 50-day Exponential Moving Average (EMA) near 0.7100 capping the broader pullback; the Aussie needs a close back above 0.7100 to argue the down-leg is over.

Support: The 0.7000 handle is the line that matters; it has so far held. A sustained break exposes 0.6950, then the 200-day EMA near 0.6900.

Bias: Neutral-to-bearish while price sits below 0.7100 and the Dollar dominates, but with a clear two-way risk next week. The daily Stochastic Relative Strength Index (Stoch RSI) near oversold leaves room for a bounce; a hot Australian CPI is the catalyst most likely to deliver one. A soft CPI into a firm US PCE points the pair back through 0.7000 toward 0.6950.

AUD/USD hourly chart

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Australian Dollar softens to near 0.7000 as Vice President canceled trip to talks with Iran

  • AUD/USD weakens to around 0.7010 in Friday’s Asian session. 
  • US Vice President cancels trip to Switzerland for Iran talks. 
  • Fed’s hawkish hold leads to rate-hike bets, supporting the US Dollar. 

The AUD/USD pair loses momentum to near 0.7010 during the Asian trading hours on Friday. The Australian Dollar (AUD) softens against the US Dollar (USD) after reports that US Vice President JD Vance canceled his trip to talks with Iran in Switzerland, raising concerns about the US-Iran peace deal. 

CNN reported on Friday that the White House indicated that the first round of technical talks with Iran under the memorandum of understanding signed this week will not take place on Friday. Vance said that the meeting wasn’t yet finalized, as it’s difficult for the Iranian officials to get out of Iran. Vice President added that he thought he would travel to Switzerland at some point this weekend.

Traders will closely monitor the developments surrounding the peace agreement. A lack of progress in US-Iran or any signs of renewed tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair.

Furthermore, the hawkish stance of the US Federal Reserve (Fed) might contribute to the USD’s upside. The US central bank on Wednesday decided to hold the interest rates steady in a 3.50% to 3.75% range as Kevin Warsh began his era in charge with a sweeping policy review. Fed officials signaled the chance of higher rates as they assess the impacts of the Iran war on inflation.

“We’ve seen very spectacular data in the U.S. that’s been surprising to the upside since late April, then the Fed was as hawkish as market expectations could ever have been, so we’ve seen more dollar upside,” said Sarah Ying, head of FX strategy at CIBC Capital Markets.

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Aussie Heads for Weekly Loss

The Australian dollar held below $0.705, near ten-week lows and headed for a modest weekly loss as a stronger US dollar and fading bets of additional RBA rate hikes weighed on the currency. Markets increasingly suspect the Reserve Bank of Australia has finished tightening after keeping the cash rate unchanged this week, with the odds of one more hike this year reduced to about 50%. While Governor Michele Bullock maintained that further tightening remains possible if inflation persists, markets expect it would take a sharply higher second-quarter inflation reading to trigger another move. Meanwhile, the US dollar index climbed to a one-year high after the Fed Reserve’s hawkish hold prompted traders to increase bets on further rate hikes. Nearly half of policymakers projected at least one increase this year amid growing inflation concerns. Elsewhere, a US-Iran interim deal and the resumption of energy flows through the Strait of Hormuz provided some support for the risk sensitive AUD.

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AUD/USD Price Forecast: Eyes 0.7050 on weaker USD; 100-day SMA holds the key for bulls

  • AUD/USD attracts fresh buyers on Thursday as the US-Iran peace deal undermines the USD.
  • The hawkish RBA further benefits the Aussie, while Fed rate hike bets could limit USD losses.
  • The bearish technical setup warrants caution before positioning for any further appreciation.

The AUD/USD pair regains positive traction during the Asian session on Thursday, reversing part of the previous day’s slide to sub-0.7000 levels, or the weekly low. Spot prices currently trade around the 0.7040 region, up nearly 0.40% for the day, amid a broadly weaker US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats from its highest level since late March amid the latest optimism over the US-Iran deal to end the war and reopen the Strait of Hormuz. Moreover, the Reserve Bank of Australia’s (RBA) hawkish signal that further rate hikes are possible if inflation remains stubbornly elevated supports the Australian Dollar (AUD) and the AUD/USD pair. However, rising bets for an interest rate hike by the US Federal Reserve (Fed) in December might hold back the USD bears from placing aggressive bets and cap the currency pair.

From a technical perspective, this week’s repeated failures near the 100-day Simple Moving Average (SMA) support breakpoint favor bearish traders. Moreover, the AUD/USD pair holds below the 50% retracement of the March-May upswing, suggesting that rallies are more likely to be sold into while spot prices remain capped beneath these overhead levels. This negative outlook is further reinforced by bearish momentum indicators. In fact, the Relative Strength Index (RSI) is near 42, and a slightly negative Moving Average Convergence Divergence (MACD) reading hints at waning upside momentum.

On the topside, immediate resistance emerges at the 50% retracement around 0.7054, followed by the 100-day SMA near 0.7085 and the 38.2% Fibonacci retracement at 0.7106, with a stronger barrier further up at the 23.6% level around 0.7171. On the downside, initial support is defined by the 61.8% Fibo. level at 0.7002, with deeper cushions at the 78.6% level around 0.6928 and the prior swing low near 0.6834, where buyers would be expected to show more interest if the decline extends.

AUD/USD daily chart

Chart Analysis AUD/USD

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.20%-0.19%-0.05%-0.01%-0.36%-0.44%-0.14%
EUR0.20%0.01%0.17%0.18%-0.16%-0.29%0.06%
GBP0.19%-0.01%0.13%0.15%-0.17%-0.28%0.03%
JPY0.05%-0.17%-0.13%0.06%-0.32%-0.44%-0.10%
CAD0.01%-0.18%-0.15%-0.06%-0.36%-0.49%-0.14%
AUD0.36%0.16%0.17%0.32%0.36%-0.12%0.22%
NZD0.44%0.29%0.28%0.44%0.49%0.12%0.35%
CHF0.14%-0.06%-0.03%0.10%0.14%-0.22%-0.35%

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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).