The Australian Dollar (AUD) and New Zealand Dollar (NZD) showed strength, while the Japanese Yen (JPY) gained as the US Dollar Index (DXY) weakened.
Geopolitical Events and Fed Comments Influence AUD/USD
On Monday, the AUD stayed steady despite renewed geopolitical tensions. The US carried out airstrikes on Iranian nuclear sites, causing a risk-off reaction in the markets. This pushed the US Dollar higher and oil prices jumped.
However, the AUD/USD quickly recovered after Iran’s response did not disrupt major oil supplies or escalate tensions further. Reports showed Iran’s missile strikes on US bases in Qatar caused no casualties, which helped calm markets.
Dovish remarks from Federal Reserve Governor Michelle Bowman also weighed on the US Dollar. She said inflation is cooling and hinted at a possible interest rate cut in July. This softened the US Dollar’s recent strength.
Australia’s Purchasing Managers Index (PMI) data, released on Sunday, had little impact. Traders were more focused on US monetary policy and global risk factors. The AUD/USD climbed above its 200-day simple moving average (SMA) as geopolitical fears eased and investors looked ahead to Fed Chair Jerome Powell’s upcoming testimony.
JPY Gains as Safe-Haven Demand Rises
The Japanese Yen reversed earlier losses from a five-week low, as investors sought safety amid Middle East tensions. After Iran’s missile strikes on US bases, traders preferred the Yen over the US Dollar.
The USD/JPY pair initially rose to 148.03, continuing last week’s bullish momentum. But it could not hold above its 100-day SMA and fell back to around 146.20 during US trading.
US Dollar Index Drops Below 99
The US Dollar Index fell below 99.00, signaling weaker demand for the Greenback. Despite strong manufacturing data and mixed PMI reports, dovish Fed comments and geopolitical risks curbed US Dollar strength.
Governor Bowman’s hints of a July rate cut added pressure on USD/JPY. She noted inflation is moving closer to the Fed’s 2% target and suggested the Fed might ease policy sooner than expected.
AUD/USD Shows High Volatility Amid Tensions
Following the US strikes on Iran, the AUD/USD experienced significant price swings. The fall in the US Dollar Index boosted the pair, along with increased demand for commodities supporting the Australian Dollar. The pair found strong support near 0.6400, pointing to further gains. Technical charts show an ascending broadening wedge pattern, indicating strong volatility.
NZD/USD Consolidates with Bullish Outlook
The NZD/USD 4-hour chart shows price consolidating between 0.5850 and 0.6020. This suggests a bullish trend. A breakout above 0.6100 could lead to a strong rise in the New Zealand Dollar against the US Dollar. The pair is expected to stay bullish as long as it remains above 0.5850.
USD/JPY Faces Resistance and Possible Drop
The USD/JPY 4-hour chart shows price moving between 142 and 148. A strong US Dollar Index pushed the pair to 148.30, but it failed to break this resistance level. As the Dollar Index pulled back, USD/JPY fell from the 148 mark. A drop below 142 could trigger a sharp decline in the pair.
