AUD/USD, NZD/USD, and USD/JPY: Recession Fears and Rate Cut Bets Drive Volatility…

Meanwhile, market sentiment has turned sharply against the US Dollar due to escalating trade tensions. President Trump’s threat of an additional 50% tariff on China—on top of the 34% retaliatory import fee—has heightened fears of a global recession. As a result, traders now expect the Federal Reserve to deliver at least four rate cuts by the end of 2025, beginning as early as June. This growing divergence between expected Fed easing and BoJ tightening has pressured USD/JPY and attracted dip buyers to the Yen.

The Fed’s dovish outlook has stalled a two-day recovery in the US Dollar. Chair Powell’s comments on inflation risks added to the pressure. The market also reacted to a 1.2% drop in real wages in Japan, showing inflation challenges. However, the data still supports the normalization of BoJ’s policy. With no major US data due on Tuesday, USD/JPY may stay under pressure. Upcoming Fed minutes and CPI data could further tilt the bias toward Yen strength.

AUD/USD Technical Analysis – Volatility

The 4-hour chart for AUD/USD shows that the pair has reached strong support at $0.5950 and continues to consolidate within a wide range around this level. It failed to break above $0.6450, the upper boundary of an ascending broadening wedge pattern, which indicates heightened volatility. A strong rebound is likely from the $0.5950 area, as this level remains a key long-term support zone.