AUD/USD has bounced back to over 0.6400 after mixed US PMI data reduced demand for the US Dollar as a safe haven. The S&P Global US Composite PMI dipped slightly; manufacturing held steady, but services weakened while still surpassing expectations. The Australian Dollar (AUD) rose against the US Dollar (USD) after hitting a one-month low due to rising tensions in the Middle East. AUD/USD was trading around 0.6426, regaining much of its earlier losses.

US Manufacturing and Services

In June, the S&P Global Composite PMI for the US fell to 52.8 from 53 in May. Manufacturing held steady at 52, but the Services PMI dropped to 53.1. These mixed results reduced demand for the US Dollar and helped AUD/USD rebound. Comments from Fed Governor Michelle Bowman about steady progress on inflation towards the 2% target and possible rate cuts also weakened the US Dollar. This shift allowed the Aussie to gain as the US Dollar Index fell below 99.00, settling around 98.70. Australia’s private sector showed growth, especially in services, which reached a three-month high according to S&P Global data. Technically, the AUD/USD pair has support near 0.6400. If it closes above 0.6450, it might rise toward 0.6500–0.6550. However, if it fails to stay above 0.6400, it could drop to around 0.6300. As the US Composite PMI eased and key sectors showed mixed trends, the decline in US Dollar demand was quick. Manufacturing stalled but didn’t fall, while services, despite softening, did better than expected. The sharp rise in AUD/USD indicates how the market reacted to these details, suggesting potential weakening in the US economy.

Domestic Momentum and Market Tension

Bowman’s recent comments signal a shift in expectations for US monetary policy. Her cautious remarks on inflation and openness to rate cuts have led to US Dollar weakness. This, in turn, has eased pressure on higher-risk currencies like the Australian Dollar, at least for now. It shows that interest rate expectations continue to drive the market, especially when broader demand signals fluctuate. In Australia, positive signs from the private sector, particularly in services, provide a buffer against downturns. The three-month high indicates that domestic momentum remains strong, even amid global market tensions. It’s crucial to monitor local data alongside external risk events, as they are becoming more significant in shaping short-term price movements than they were during much of the second quarter. Technically, 0.6400 has proven to be a reliable support level. This area continues to serve as a crucial point for directional movements. If we see a daily close above 0.6450, market strategies may shift, aiming for the next resistance level around 0.6550. Activity near these levels often triggers mechanical flows that can speed up price changes. On the downside, any drop below 0.6400—especially with renewed demand for the US Dollar or weakening domestic sentiment—could pave the way toward lower levels seen in prior defensive phases, particularly around 0.6300. Such moves often lead to swift reactions, driven by short-term traders exiting quickly. Given how sentiment is linked to policy statements, it’s important to stay alert to Fed communications, especially anything that could change expectations for rate cuts. Recent sessions have shown how slight adjustments in outlooks—without significant changes in data—can lead to sharp currency movements. This context should not be overlooked when assessing directional risk. Create your live VT Markets account and start trading now.

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