The Australian Dollar experienced a decline of 0.30% on Monday, falling as geopolitical tensions escalated following Iran’s suspension of negotiations with the United States amid intensified Israeli military actions in Lebanon. This deterioration of risk appetite contributed to the AUD/USD pair reaching a two-day low of 0.7134.
Geopolitical factors are currently influencing market sentiment. The escalating violence from Israel in Lebanon has interrupted US-Iran discussions, prompting a response from the Trump administration aimed at mitigating the situation. Despite these diplomatic interventions, oil prices surged, with West Texas Intermediate (WTI) climbing over 5%, surpassing the $92.00 per barrel mark. This rise in crude prices consequently placed downward pressure on US Treasury yields and bolstered the US dollar. The US Dollar Index (DXY), which tracks the dollar’s performance against a basket of six currencies, saw an uptick of 0.24% to 99.18, creating further headwinds for the AUD/USD exchange rate.
In economic news, the US ISM Manufacturing PMI for May exceeded forecasts, increasing to 54.0 from April’s figure of 52.7. Additionally, the prices paid component saw a reduction from 84.6 to 82.1. Comments from Federal Reserve Governor Jerome Powell highlighted concerns that the central bank could lose credibility if President Trump decides to dismiss officials for differing opinions on monetary policy.
Looking ahead, market participants are focusing on upcoming economic indicators, with the JOLTS report set for release on Tuesday and both ADP data and ISM Services scheduled for Wednesday. Attention will further pivot towards the critical Nonfarm Payrolls report anticipated later in the week.
The Australian Dollar has pulled back from its near yearly high of 0.7277, attributed to a combination of disappointing jobs data and a minor decrease in inflation rates. The Reserve Bank of Australia’s (RBA) recent rate hikes—three so far this year—have led to a reduction in the probability of another hike in June to just 5%. Investors are also bracing for GDP data for the first quarter of 2026, which is expected to show a quarterly growth rate of 0.5%.
From a technical perspective, the AUD/USD trades at 0.7161, maintaining a constructive bullish outlook as it remains above a cluster of rising trend-line supports and a triple simple moving average (SMA) around 0.7110. The price action respects recent upward trends originating from 0.6897 and 0.6833, with the Relative Strength Index (RSI) holding around 50, suggesting a consolidative phase rather than an overextended advance.
Support levels are identified at the latest uptrend line near 0.7155, followed by a secondary support around 0.7142 and the triple SMA zone at 0.7110. A breach below this level could lead to deeper support around 0.6451. Conversely, bulls face resistance at a higher trendline projected towards 0.7810, and more significant resistance could materialize near 0.8231, potentially capping further upward movement.
The Australian Dollar showed varied performance against major currencies today, with the strongest gains noted against the New Zealand Dollar. The accompanying table provides a comprehensive view of the percentage changes across various currency pairs, reflecting the Australian Dollar’s mixed sentiment in the global market.
