Japanese Yen and Aussie Dollar Forecasts: Aussie Inflation and the Fed to Trigger Volatility

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USDJPY – Daily Chart – 300724

See today’s full USD/JPY forecast with chart setups and trade ideas.

AUD/USD: Aussie Inflation to Spotlight the RBA

Turning to the AUD/USD pair, Australia’s crucial quarterly inflation report will fuel speculation about the RBA’s policy stance. Economists forecast the RBA Trimmed Mean CPI to rise 2.7% year-on-year in Q2, down from 2.9% in Q1.

A softer reading, toward the middle of the RBA’s 2-3% target range, could cement bets on an August RBA rate cut and two further policy moves in Q4 2025. A more dovish RBA policy stance would pressure the Aussie dollar and AUD/USD pair.

Conversely, a higher inflation reading could sink bets on an August rate cut, driving Aussie dollar demand.

This month, RBA Governor Michele Bullock underscored the significance of the quarterly inflation data, stating:

“If the quarterly CPI shows inflation falling toward the middle of the band over time, the RBA can cut interest rates in the next meeting.”

AUD/USD: Key Scenarios to Watch

  • Bearish AUD/USD Scenario: Softer-than-expected Aussie inflation data, stalled US-China trade talks, or Beijing’s silence on stimulus. These factors could push AUD/USD toward the 50-day EMA, exposing sub-$0.65 levels.
  • Bullish AUD/USD Scenario: A US-China trade deal, hotter Aussie inflation, or new stimulus measures from Beijing. These factors could send AUD/USD toward the $0.6550 level, bringing $0.66 into play.

Click here for a more comprehensive analysis of AUD/USD trends and trade data insights.

AUD/USD Daily Outlook: Fed Policy Outlook and Rate Differentials

Later today, US economic data and the Fed’s policy outlook will influence US-Australian interest rate differentials and US dollar demand.

Better-than-expected data and a hawkish Fed policy outlook would widen the rate differential in favor of the US dollar, dragging AUD/USD toward the 50-day EMA. A drop below the 50-day EMA would expose $0.64500 and potentially the 200-day EMA.

On the other hand, weaker GDP and labor market data, and Fed hints at a September rate cut, could narrow the rate differential and send AUD/USD toward the $0.6550 level. A sustained move above $0.6550 may pave the way to the $0.66 level.



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