The AUD/USD pair is holding steady around the 0.7250 mark, especially after an unexpected uptick in the US Producer Price Index (PPI) for April.
In a separate context, President Trump has issued a warning to Iran just before his upcoming meeting with President Xi Jinping of China.
Trump asserted that Iran needs to come to the table with a “good deal” or risk catastrophic consequences. Notably, the situation in the Strait of Hormuz, where Iran has imposed a de facto blockade, has contributed to rising energy prices. This conflict will likely be a key topic during Trump’s discussions with Xi Jinping.
April’s PPI surged to 6.0% year-over-year, surpassing economists’ predictions of 4.9%. This stronger reading provided the US dollar with some support.
The core PPI, which excludes food and energy prices, also rose by 1% from the previous month, bringing the year-on-year figure to 5.2%, again above the expected 4.3%.
According to the International Energy Agency (IEA), global oil stocks are plummeting at an unprecedented rate and are expected to decline further in the coming months, primarily due to supply disruptions in the Middle East linked to the Iran conflict.
In March and April, global oil inventories dropped by approximately 4 million barrels a day. This data comes from a monthly report by the IEA, which manages the release of emergency fuel reserves for major countries like the United States, Japan, and Germany. Even if hostilities were to cease next month, the IEA indicated that the market would still be “severely undersupplied” until at least October.
Short-term technical analysis:
Looking at the 4-hour chart, AUD/USD is priced at 0.7241, above the 20-period simple moving average (SMA) of 0.7238 and the 100-period SMA around 0.7191. This suggests a slight bullish outlook in the short term. There’s a cluster of support nearby that might limit any downward movement for now, while the Relative Strength Index (RSI) is around 55, indicating steady upward momentum without being overextended.
On the upside, the first resistance level appears at 0.7243, followed by a more significant barrier at 0.7254, where recent supply has been detected. On the downside, the 20-period SMA at 0.7238 provides initial support, succeeded by horizontal support levels at 0.7235 and 0.7234, with the 100-period SMA around 0.7191 reinforcing the broader bullish trend if there’s a deeper pullback.
