AUD/USD, NZD/USD, and USD/JPY Analysis: Geopolitical Tensions Drive Price Action

Geopolitics and Fed Comments Shape Next Move in AUD/USD

The Australian Dollar (AUD) held steady on Monday despite fresh geopolitical tensions. The United States’ airstrikes on Iranian nuclear sites caused a risk-off market open, pushing the US Dollar (USD) higher while oil prices gapped up.

However, the AUD/USD quickly rebounded after Iran’s retaliation failed to disrupt major oil flows or trigger further escalation. Reports confirmed that Iran’s missile attacks on US bases in Qatar caused no casualties, which helped stabilize risk sentiment.

Dovish comments from Fed Governor Michelle Bowman further weighed on the US Dollar. She indicated that inflation was cooling and signaled support for a possible rate cut in July, prompting a softening in the strength of the USD.

Australia’s own PMI data released on Sunday failed to move the market. Traders focused instead on US monetary policy and global risk headlines. The AUD/USD climbed back above its 200-day SMA as geopolitical fears eased and attention shifted to Powell’s upcoming testimony.

Yen Strengthens on Safe-Haven Flows and Fed Dovishness

The Japanese Yen (JPY) reversed its decline from a five-week low as safe-haven demand increased. After reports of Iran’s missile strike on US bases, investors preferred the Yen over the Dollar amid heightened Middle East tensions.

Initially, USD/JPY extended its rally, reaching 148.03, driven by the bullish momentum of last week. But it failed to hold above its 100-day SMA and pulled back sharply toward the 146.20 level during US trading hours.

The US Dollar Index (DXY) also fell below 99.00, reflecting a weakening sentiment for the USD. Despite robust manufacturing data, mixed US PMIs, and dovish Fed rhetoric, demand for the Greenback was curbed.

Fed Governor Bowman’s comments on the rate cut added to the pressure on USD/JPY. She noted that inflation is moving toward the Fed’s 2% target and hinted at possible easing in July, triggering speculation that the Fed may pivot sooner than expected.

AUD/USD Technical Analysis – Ascending Broadening Wedge Pattern

The AUD/USD shows intense volatility following the US strikes on Iran. The drop in the US Dollar Index has triggered positive momentum in the pair. Additionally, surging demand for commodities has boosted the Australian Dollar. The pair has found strong support around the 0.6400 level, signaling further upside potential. The emergence of an ascending broadening wedge within the symmetrical broadening wedge shows intense volatility in the pair.

NZD/USD Technical Analysis – Bullish Price Action

The 4-hour chart for NZD/USD indicates that the price is consolidating within the 0.5850-0.6020 range. This consolidation indicates a bullish price structure, and a break above 0.6100 could trigger a strong upward move in the New Zealand Dollar against the US Dollar. As long as the price remains above 0.5850, the pair is likely to continue higher.

USD/JPY Technical Analysis – Descending Broadening Wedge

The 4-hour chart for USD/JPY shows that the price has been consolidating between the 142 and 148 levels. A strong rebound in the US Dollar Index pushed the pair toward 148.30, but it failed to break this resistance. As the Dollar Index pulled back from resistance, USD/JPY also declined from the 148 level. A break below 142 could trigger a sharp drop in the pair.