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Australian dollar holds ground vs Japanese Yen amid May Trade Deficit

  • AUD/JPY remains calm following missing domestic trade data expectations.
  • Australia’s Trade Balance shifted to a A$3,018M deficit in May, reversing April’s surplus.
  • The Japanese Yen may receive support amid the potential for government intervention.

AUD/JPY remains flat after recovering daily losses, trading around 112.10 during the Asian hours on Thursday. The currency cross held its ground as the Australian Dollar (AUD) showed resilience, even after domestic trade data significantly missed market expectations.

According to the Australian Bureau of Statistics (ABS), the Trade Balance unexpectedly swung into a deficit of A$3,018 million in May, a sharp reversal from the previous month’s revised surplus of A$1,383 million. This fell well short of the market consensus, which had anticipated a surplus of A$2,200 million. The downturn was primarily driven by a 6.9% month-on-month plunge in exports, compounded by a 2.6% increase in imports.

The AUD/JPY cross moves little as the Japanese Yen (JPY) remains under intense pressure despite mounting evidence that the Bank of Japan (BoJ) may continue normalizing its monetary policy. Japan’s latest Q2 Tankan Large Manufacturing Index climbed to 22 from 17 prior, the highest level in eight years, strengthening the case for further interest rate hikes later this year.

The JPY continues to languish near its weakest level against the US Dollar (USD) in four decades. This prolonged weakness has kept traders on high alert for potential government intervention, which could put downward pressure on the AUD/JPY cross, especially ahead of a US public holiday when thinner market liquidity could magnify the impact of any official action. Reinforcing this caution, Finance Minister Satsuki Katayama reiterated warnings that authorities stand ready to respond appropriately to currency market developments at any time.

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United States Dollar Index trades subduedly around 101.35 ahead of US NFP data

  • The US Dollar Index edges down to near 101.35 ahead of the US NFP data for June.
  • Investors will closely track the US Average Hourly Earnings data to get fresh cues regarding the inflation outlook.
  • The Fed is almost certain to deliver at least one interest rate hike this year.

The US Dollar (USD) reflects a subdued performance in the countdown to the United States (US) Nonfarm Payrolls (NFP) data for June, which will be published at 12:30 GMT.

At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower to near 101.35.

Investors will pay close attention to the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook. The US NFP report is expected to show that the economy created 110K fresh jobs, lower than 172K in May. The Unemployment Rate is seen remaining steady at 4.3%.

Average Hourly Earnings, a key measure of wage growth, is estimated to arrive higher at 3.5% Year-on-Year (YoY) from 3.4% in May, with monthly figures rising steadily by 0.3%.

The impact of the US NFP report, especially the Average Hourly Earnings data, will be significant on the Fed’s interest rate expectations, as Chair Kevin Warsh warned at the European Central Bank (ECB) Forum in Sintra on Wednesday that inflation remains “too high”, while stressing the need to bring price stability. As expected, Warsh didn’t offer any cues regarding the Fed’s future decisions on interest rates.

Meanwhile, the CME FedWatch tool shows an almost 85% chance that the Fed will deliver at least one interest rate hike.

On Wednesday, both the US ADP Employment Change and the ISM Manufacturing PMI data for June missed estimates. The ADP report showed that the private sector created 98K fresh jobs, lower than the estimates of 113K. The Manufacturing PMI arrived lower at 53.3, while it was expected to remain steady at 54.0.

Warsh rejects forward guidance but doubles down on 2% inflation goal

Fed Chair Warsh delivers a moderately hawkish message, with a FXS Speechtracker score of 5.6/10 that cannot be benchmarked relative to the historical average but still signals a clear focus on price stability. The refusal to provide forward guidance, coupled with the assertion that the Central Bank must judge whether the AI boom is inflationary and the insistence that anyone expecting comfort with inflation above 2% will be disappointed, underscores a data-dependent, independence-focused stance that keeps the Dollar supported while acknowledging AI as a potential macro game-changer. Warsh’s characterization of steady labor markets, a solid supply side, and declining inflation expectations and risks frames the current environment as one where the Fed can “chart a new course” without relaxing the 2% target.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-hawkish level of 123.64, confirming that the speech did not materially shift the broader policy tone captured by the FXS Speechtracker. With the index firmly above 100, the Fed remains in hawkish territory, and the lack of movement suggests markets largely anticipated Warsh’s emphasis on independence, price stability, and cautious engagement with the AI-driven economic backdrop.

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EUR/JPY Price Forecast: Edges lower below 185.00, while near-term bullish bias holds

  • EUR/JPY posts modest losses near 184.95 in Thursday’s early European session.
  • The cross keeps a bullish near-term tone, but further consolidation cannot be ruled out amid neutral RSI momentum.
  • The first upside barrier is seen at 185.00; the initial support level to watch is 184.90.

The EUR/JPY cross trades on a negative note around 184.95 during the early European session on Thursday. Eurozone inflation fell more than expected in June, easing pressure on the European Central Bank (ECB) to raise rates at its next meeting on July 23. This, in turn, could weigh on the Euro (EUR) against the Japanese Yen (JPY).

Data released by Eurostat on Wednesday showed that Eurozone inflation, as measured by the Harmonized Index of Consumer Prices (HICP), dropped to 2.8% YoY in June from 3.2% in May. This figure came in below the consensus of 3.0%.

Morgan Stanley economists said softer Eurozone June inflation could also “lower the bar a touch for the ECB to be on hold in September,” adding that energy pressures likely had a “limited” direct impact on eurozone prices.

Following Wednesday’s print, traders continued to anticipate the ECB to deliver another quarter-point rate rise by the end of this year, according to Morningstar.

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY holds above the Bollinger Bands middle line and the 100-day moving average, keeping a mildly bullish near-term tone as price gravitates near recent highs. The Relative Strength Index (14) hovers around 50, suggesting balanced momentum and favoring a continuation of range-bound gains rather than an impulsive breakout.

On the topside, immediate resistance is located at the 185.00 psychological level, en route to the June 30 high of 185.86. The next hurdle emerges at the Bollinger Bands upper band near 186.15, where bullish attempts could meet profit-taking. 

On the downside, initial support is seen at the Bollinger middle band at 184.90, followed by the 100-day moving average at 184.65; a deeper pullback would expose the lower Bollinger band support around 183.65.

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Swiss Franc declines ahead of Swiss Real Retail Sales, SVME PMI data

  • USD/CHF holds gains as the US Dollar remains stronger amid escalating geopolitical friction.
  • The CME FedWatch tool shows fed funds futures are pricing in a nearly 63% chance of a September rate hike.
  • Switzerland’s June KOF Economic Barometer beat expectations, climbing to a four-month high of 101.2 from May’s revised 98.6.

USD/CHF gains ground for the second consecutive day, trading around 0.8090 during the Asian hours on Wednesday. Traders will likely observe the upcoming Swiss Real Retail Sales and SVME Purchasing Managers’ Index (PMI) data due later in the day.

The USD/CHF pair appreciates as the US Dollar (USD) gains ground on safe-haven demand tied to escalating geopolitical friction. Uncertainty is clouding the US-Iran Doha peace talks after US negotiators Jared Kushner and Steve Witkoff arrived in Qatar to meet with mediators. Tehran’s subsequent announcement that it will not meet directly with the US envoys has dimmed prospects for a swift or lasting resolution, keeping geopolitical risk premiums alive and well in the market.

Simultaneously, the Greenback is drawing immense strength from rising hawkish sentiment surrounding the Federal Reserve’s policy outlook. At its June meeting, the Fed held its benchmark interest rate steady at a target range of 3.50% to 3.75% while notably removing previous language that hinted at future rate cuts. Reflecting this hawkish shift, the CME FedWatch tool shows that fed funds futures are now pricing in a nearly 63% chance of an interest rate hike by September.

Looking ahead, market momentum is expected to accelerate during the US session as traders digest major upcoming catalysts. Immediate focus is on Federal Reserve Chairman Kevin Warsh’s appearance at the ECB Forum in Sintra, alongside Wednesday’s releases of the ADP private employment report and the ISM Manufacturing PMI. Following these events, market attention will shift entirely to Thursday’s crucial Nonfarm Payrolls (NFP) monthly jobs report, which will likely dictate the next major leg for the Dollar.

On Tuesday, Switzerland’s KOF Economic Barometer climbed to 101.2 in June from an upwardly revised 98.6 in May, hitting a four-month high and easily beating the market consensus of 98.2. This robust reading signals a stronger domestic economy, reducing the pressure on the Swiss National Bank (SNB) to cut interest rates to stimulate growth. Because steady or higher interest rates attract global investors looking for yield, demand for the Swiss Franc (CHF) may emerge.

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USD/JPY Price – Extends rally to near 162.70 amid soaring US bond yields

  • USD/JPY rises to near 167.73 as US Treasury Yields soar, following upbeat US JOLTS Job Openings data.
  • Investors shift their focus to the US ADP Employment Change and the ISM Manufacturing PMI data for June.
  • Japan’s officials have signaled that they are ready to intervene to support the Yen.

The USD/JPY pair trades 0.1% higher to near 162.73 during the European trading session on Wednesday. The pair reflects strength as surging United States (US) Treasury Yields have strengthened the US Dollar (USD).

In the European trade, 10-year US Treasury Yields are up 0.18% to 4.47%, extending Tuesday’s little over 2% gains. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is up 0.16% to near 101.33.

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 Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.12%0.14%0.08%0.10%0.36%0.02%0.05%
EUR-0.12%0.02%-0.04%-0.01%0.26%-0.11%-0.05%
GBP-0.14%-0.02%-0.06%-0.03%0.22%-0.13%-0.05%
JPY-0.08%0.04%0.06%0.00%0.29%-0.09%-0.01%
CAD-0.10%0.01%0.03%-0.01%0.27%-0.11%-0.02%
AUD-0.36%-0.26%-0.22%-0.29%-0.27%-0.37%-0.29%
NZD-0.02%0.11%0.13%0.09%0.11%0.37%0.09%
CHF-0.05%0.05%0.05%0.01%0.02%0.29%-0.09%

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).

US bond yields are soaring due to signs of improving US job market conditions. On Tuesday, the US JOLTS Job Openings data for May arrived at 7.594 million fresh jobs, higher than 7.3 million estimates and the previous reading of 7.585 million.

Meanwhile, investors await the US ADP Employment Change and the ISM Manufacturing PMI data for June, which will be released during the North American session.

On the Tokyo front, investors expect the Japanese administration to intervene anytime soon to support the falling Japanese Yen (JPY). On Tuesday, Japan’s Chief Cabinet Secretary Minoru Kihara said that the administration is always ready to take necessary action on Forex; however, he didn’t deliver any comments regarding specific FX levels.

USD/JPY technical analysis

USD/JPY trades higher at around 162.73, extending its bullish bias as spot holds well above the 20-day exponential moving average (EMA) at 161.19. The overall trend of the pair is bullish, following the breakout of the Rising Channel formation.

The Relative Strength Index (RSI) at 78.45 sits deep in overbought territory, suggesting upside momentum remains strong but also warns that the pair could be vulnerable to bouts of corrective pullback even within the broader uptrend.

On the downside, immediate support is seen at the Rising Channel breakout region near 161.75, followed by the 20-day EMA near 161.19. Looking up, the pair could extend the rally towards 163.00 and 164.00.

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EUR/USD Price – Weakens to near 1.1400 as ECB hike bets recede, bearish vibe prevails

  • EUR/USD weakens to around 1.1410 in Wednesday’s early European session.
  • The negative outlook of the major pair remains intact below the 100-day SMA, with bearish RSI momentum.
  • The immediate resistance level is seen at 1.1485; the first downside target to watch is 1.1320.

The EUR/USD pair trades on a negative note near 1.1410 during the early European trading hours on Wednesday. Cooling inflation in Germany has lowered expectations for the European Central Bank (ECB) rate hikes, weighing on the Euro (EUR) against the US Dollar (USD).

Germany’s Consumer Price Index (CPI) inflation fell to 2.3% in June, down from 2.6% in May, according to Destatis on Tuesday. This figure came in softer than the market expectations of 2.5%. ECB President Christine Lagarde last week said that there was no need for “forceful” action, citing falling energy prices and the lack of “second-round” effects like higher wage demands that could further stoke inflation.

Traders brace for the preliminary reading of the Harmonized Index of Consumer Prices (HICP) from the Eurozone. In case of hotter-than-expected outcomes, this could lift the shared currency in the near term.

On the US docket, the ADP Employment and ISM Manufacturing Purchasing Managers Index (PMI) reports will be published later on Wednesday. All eyes will be on the Nonfarm Payrolls (NFP) data on Thursday, which is expected to show 111,000 job additions in June.

Chart Analysis EUR/USD

Technical Analysis:

In the daily chart, EUR/USD maintains a bearish near-term tone as it holds below the 20-day Bollinger simple moving average (SMA) and the 100-day moving average (MA). The pair is drifting near the lower half of the recent Bollinger envelope, while the 14-period Relative Strength Index (RSI) around 36 suggests weak, still-negative momentum rather than an immediate oversold condition.

On the topside, initial resistance is seen at the 20-day Bollinger SMA near 1.1485, followed by the 100-day MA around 1.1632 and the upper Bollinger band close to 1.1650, which together outline a dense supply zone capping recovery attempts. On the downside, the June 29 low of 1.1381 acts as the next notable support. Any follow-through selling below this level could expose further weakness toward lower Bollinger band at approximately 1.1320, followed by the 1.1300 psychological level. 

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Canadian Dollar weakens as geopolitical uncertainty lifts US Dollar

  • USD/CAD rises as safe-haven demand boosted the US Dollar amid uncertainty surrounding the US-Iran peace talks in Doha.
  • US envoys arrived in Qatar for Iran peace talks, but Tehran refused direct meetings, clouding prospects for a deal.
  • The commodity-linked CAD struggles as Crude oil prices decline on easing supply concerns.

USD/CAD has recovered its recent losses from the previous day, trading around 1.4220 during the Asian hours on Wednesday. The pair appreciates as the US Dollar (USD) gains ground on safe-haven demand amid uncertainty over United States (US)-Iran Doha talks.

US negotiators Jared Kushner and Steve Witkoff arrived in Qatar on Tuesday to meet with mediators regarding the implementation of an initial peace deal to end the conflict with Iran. However, Tehran stated it would not meet directly with the US envoys, clouding prospects for a lasting resolution and keeping geopolitical risk premiums alive in the market.

The Greenback received a boost from rising hawkish sentiment surrounding the Federal Reserve’s policy outlook. At its June meeting, the Fed held its benchmark interest rate steady at a target range of 3.50% to 3.75% while notably removing language that hinted at future rate cuts. According to the CME FedWatch tool, Fed funds futures are now pricing in a nearly 63% chance of an interest rate hike by September.

The USD/CAD pair also rises as the commodity-linked Canadian Dollar (CAD) faces challenges due to lower oil prices. Crude oil prices decline as traders weigh in on potential peace talks in Doha between the US and Iran.

Both nations are working toward a lasting resolution to ease tensions in the Strait of Hormuz following recent military clashes. However, Tehran maintains its firm stance on controlling maritime traffic through the strategic waterway; both sides have halted their exchange of fire, allowing oil tanker traffic and shipments to steadily recover.

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EUR/JPY Price – Eyes 186.00 amid constructive bullish bias

  • EUR/JPY could test the upper boundary of a symmetrical triangle around 186.00.
  • The 14-day Relative Strength Index at 57 indicates firm bullish momentum, leaving plenty of room for further gains.
  • Initial support sits at VWAP and clustered EMAs just below 185.50, providing a solid floor for buyers.

EUR/JPY moves little after four days of gains, trading around 185.70 during the Asian hours on Monday. The currency cross is maintaining a constructive bullish bias as it holds above the session Volume-Weighted Average Price (VWAP) at 185.29 and both the nine-period and 50-period Exponential Moving Averages (EMAs) around 184.95–184.99. This positioning suggests dip-buying interest remains in place.

Meanwhile, the 14-day Relative Strength Index (RSI) near 57.0 points to firm but not overextended upside momentum, leaving room for further gains as long as price stays supported above these nearby averages.

The technical analysis of the daily chart suggests that the EUR/JPY cross is positioned near the upper boundary of a symmetrical triangle around 186.00, indicating that the asset is gearing up for a potential breakout. Further advances above the triangle would strengthen the bullish bias and support the currency cross to test the all-time high of 187.95, which was recorded on April 17.

On the downside, initial support aligns first with the VWAP and clustered EMAs just below 185.50. A break below this confluence support zone would expose the symmetrical triangle’s lower boundary around 183.50, followed by the four-month low of 181.87, recorded on March 16, and the six-month low of 180.81.

Chart Analysis EUR/JPY
EUR/JPY: Daily Chart

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.16%0.21%0.16%0.16%0.42%0.19%0.13%
EUR-0.16%0.04%-0.02%-0.00%0.27%0.00%-0.04%
GBP-0.21%-0.04%-0.04%-0.03%0.21%-0.05%-0.06%
JPY-0.16%0.02%0.04%-0.02%0.27%-0.01%-0.04%
CAD-0.16%0.00%0.03%0.02%0.28%-0.00%-0.02%
AUD-0.42%-0.27%-0.21%-0.27%-0.28%-0.27%-0.29%
NZD-0.19%-0.01%0.05%0.00%0.00%0.27%-0.02%
CHF-0.13%0.04%0.06%0.04%0.02%0.29%0.02%

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