Australian Dollar falls as strong US manufacturing data boosts Greenback

• US ISM Manufacturing PMI rose to 54 in May, beating expectations and supporting the US Dollar.
• Renewed tensions in the Middle East pressured risk sentiment, weighing on the Australian Dollar.
• Friday's US Nonfarm Payrolls report will be the focus for clues on the Fed's next policy moves.

The AUD/USD pair trades near the 0.7160 region on Monday as the United States Dollar (USD) strengthens following upbeat manufacturing data, while renewed geopolitical tensions and cautious market sentiment weigh on the Australian Dollar (AUD).

The latest Institute for Supply Management (ISM) Manufacturing PMI rose to 54 in May from 52.7 in April, surpassing market expectations of 53 and signaling accelerating growth in the US manufacturing sector.

Meanwhile, risk-sensitive currencies such as the Australian Dollar came under pressure after Iran reportedly halted message exchanges with the US following attacks on Lebanon. The development revived concerns about broader tensions in the Middle East, boosting demand for the US Dollar and other defensive assets.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7161. The pair maintains a neutral-to-mildly-constructive tone, trading above the 20-period Simple Moving Average (SMA) at 0.7156 but remains capped by the 100-period SMA at 0.7175. This configuration suggests consolidation within a tight range, with short-term buyers defending the recent recovery while the broader upturn remains unconfirmed. The Relative Strength Index (RSI) hovers at 50.0, hinting at balanced momentum after the latest bounce.

On the topside, initial resistance emerges at 0.7163, the nearby horizontal barrier, followed by the 100-period SMA at 0.7175, where a sustained break would be needed to open a more decisive bullish phase. On the downside, immediate support is provided by the 20-period SMA at 0.7156, with further cushions at 0.7152 and 0.7148, ahead of a more significant floor around 0.7135. A clear move outside this 0.7135–0.7175 band would likely define the next directional leg.

(The technical analysis of this story was written with the help of an AI tool.)