AUD/USD and NZD/USD climbed as the US dollar fell below 100 amid trade tensions. Key resistance levels and upcoming data will test the rally’s strength.
By : Matt Simpson, Market Analyst
View related analysis:
- AUD/USD Weekly Outlook: GDP, NFP On Tap
- USD, EUR, GBP, JPY Outlook: Weekly COT Report Highlights
- EUR/USD, USD/JPY, USD/CAD Outlook: US Dollar Slammed Ahead of PCE Inflation
- Gold at Technical Crossroads Ahead of GDP, PCE; ASX 200 Stalls at Resistance
The US dollar (USD) continued its descent below 100 on Monday as cracks widened in the US economy and Donald Trump tightened the screws on trade partners. Trump has given until Wednesday, June 4 for all partners to present their best trade deals, or have tariffs reinstated. Last week an appeals court reversed an earlier court ruling to deem the tariffs as illegal.
ISM manufacturing contracted for a third month and at its fastest pace since November (48.5).
- New orders contracted for a fourth moth, though at a slower pace of 76.6 (47.2 prior).
- Employment contracted for a fourth month (46.8).
- Prices paid slowed slightly, but remains elevated and near a 3-year high at 69.4.
US Dollar Index (USD) Technical Analysis
Thursday’s high met resistance almost perfectly at the February bearish trendline. Prices reversed lower and back beneath 100 to close the day with a bearish engulfing candle. The USD Dollar Index is how clinging into the December low (98.59) while the daily chart displays something reminiscent of a head and shoulders top.
While the daily RSI (2) is near its oversold level to warn of mean reversion over the near term, the daily RSI (14) – which represents a higher-timeframe momentum – is not. The RSI (14) is below 50 to show negative momentum and confirming the bearish move. From a purely technical perspective, bears may opt to fade into minor rallies. And the USD seems poised to move lower if tariffs are indeed reinstated on Wednesday.
The 98 handle and April low (97.68) come into focus for bearish if the USD breaks beneath the December low. The next support zone for bears is the 2023 low (97.75) to 97 handle.
Click the website link below to read our Guide to central banks and interest rates in Q2 2025
https://www.forex.com/en-us/market-outlooks-2025/q2-central-banks-outlook/
NZD/USD Technical Analysis: New Zealand Dollar vs US Dollar
The Reserve Bank of New Zealand (RBNZ) planted the seed that they may be at or near the end of their easing cycle last week, when they cut rates by 25bp to 3.25%. This provides NZD/USD bulls with an edge during bouts of USD weakness and helps explain why NZD/USD was the strongest FX major on Monday.
The trend structure on the NZD/USD daily chart appears to be more bullish than AUD/USD. NZD/USD also came close to breaking above its November high on Monday, and price action has generally been much less choppy compared to AUD/USD over the past two weeks. NZD/USD is therefore my preferred bullish setup, though AUD/USD shows the potential for mean reversion and to remain range bound. The relative difference therefor suggests AUD/NZD could move lower.
AUD/USD Technical Analysis: Australian Dollar vs US Dollar
The Australian dollar rose 1% on Monday thanks to the weaker US dollar, and that has taken AUD/USD back up to the top of its 0.64–0.65 range. It is worth noting that 65c has proven a stumbling block for AUD/USD bulls in recent times, so it is an area traders should watch closely to see how prices react. Clearly, if the USD really does roll out of bed then a bullish breakout seems more likely on AUD/USD than not. Though there seems to be a reasonable chance that any initial move towards last week’s high could get faded and provide a cheeky short over the near term.
Click the website link below to read our exclusive Guide to AUD/USD trading in Q2 2025
https://www.forex.com/en-us/market-outlooks-2025/q2-aud-usd-outlook/
USD/CAD Technical Analysis: US Dollar vs Canadian Dollar
I outlined a bullish case for the Canadian dollar last week based on market positioning, which assumes an eventual break of a bearish trendline. If correct, that translates to a bearish breakout on USD/CAD beneath its 2021 bullish trendline.
We have now seen USD/CAD twice try to break the trendline in question. While the purist could deem it as invalidated, the trendline clearly remains relevant, given that prices closed almost perfectly on it on Monday following an intraday break beneath it. We could also label the two swing lows as a double bottom, and USD/CAD could indeed rally if tariffs are not reinstated with Canada tomorrow. So, like AUD/USD, the Canadian dollar is at a crucial juncture which really could see the market break either way depending on how Trump plays it over the next 48 hours.
USD/CHF Technical Analysis: US Dollar vs Swiss Franc
A head and shoulders top has formed on the USD/CHF daily chart. The bearish continuation pattern (during a downtrend) projects a downside target around 0.7895, though the April low (0.8040) and 0.80 handle are likely to provide support if prices continue lower from here.
USD/CHF is the ideal instrument for traders seeking a direct correlation to the US dollar index, though price action is cleaner in the Swiss franc that it is on the USD index.
Economic Events in Focus (AEST / GMT+10)
08:45: NZD Terms of Trade Index (Q1) (NZD/USD, AUD/NZD, NZD/JPY)
09:50: JPY Monetary Base (May) (USD/JPY, EUR/JPY, Nikkei 225)
11:30: AUD RBA Meeting Minutes Current Account (Q1), Company Profits (Q1), Business Inventories, Net Exports Contribution (AUD/USD, ASX 200, AUD/JPY, AUD/NZD)
11:45: CNY Caixin Manufacturing PMI (May) (USD/CNY, CNH/JPY)
13:35: JPY 10-Year JGB Auction (USD/JPY, Nikkei 225)
16:30: CHF CPI (May) (USD/CHF, CHF/JPY, EUR/CHF)
00:00: USD JOLTS Job Openings (Apr), Factory Orders (Apr), Durables Goods Orders (Apr) (USD, Gold, WTI Crude Oil, S&P 500, Nasdaq 100, Dow Jones)
00:10: USD IBD/TIPP Economic Optimism (Jun) (USD, Gold, WTI Crude Oil)
02:45: USD Fed Goolsbee Speaks (USD, Gold, WTI Crude Oil)
03:00: USD Fed Governor Cook Speaks (USD, Gold, WTI Crude Oil)
05:30: USD Fed Logan Speaks (USD, Gold, WTI Crude Oil)
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter u/cLeverEdge
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.