Australian Dollar edges higher after mixed US PMIs

AUD/USD trades higher near the 0.6990 area on Friday, recovering from an earlier pullback as the US Dollar (USD) struggles to gain clear momentum following mixed United States (US) business-activity data.

The preliminary S&P Global Manufacturing Purchasing Managers Index (PMI) eased to 53.8 in July from 53.9, missing the market forecast of 54.5. In contrast, the Services PMI climbed sharply to 53.6 from 51.2, significantly exceeding expectations of 51.0. The figures showed that manufacturing momentum weakened slightly, while activity in the dominant services sector accelerated.

The strong services reading may keep United States (US) Treasury yields supported and limit the Australian Dollar’s recovery. However, the manufacturing disappointment and broader USD consolidation have allowed AUD/USD to regain some ground, with the 4-hour chart showing a modest rebound from recent lows.

Investors will now turn their attention to next week’s Federal Reserve (Fed) meeting on July 28–29. The Fed is widely expected to leave interest rates unchanged at 3.50%–3.75%. As this meeting will not include a Summary of Economic Projections (aka an updated dot plot), the main focus will be on the policy statement and Fed Chair Kevin Warsh’s press conference.

Warsh’s language on elevated inflation, resilient economic activity, and the impact of higher energy prices will be crucial. A hawkish message suggesting that further interest rate increases remain possible could strengthen the Greenback and pressure AUD/USD.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6988, hovering in a tight range with a neutral near-term bias. The pair holds above the longer-term 100-period Simple Moving Average (SMA) at 0.6964, which underpins the broader recovery, but trades just under the 20-period SMA at 0.6993, highlighting a lack of directional conviction. The Relative Strength Index (RSI) sits just below the 50 line, hinting that upside momentum has cooled and that the market is consolidating after recent gains.

On the topside, immediate resistance emerges at 0.6990, followed by the 20-period SMA at 0.6993 and then the horizontal barrier at 0.6995, where a clear break would open the way for a more decisive bullish extension. On the downside, initial support is seen at 0.6983, ahead of the intraday floor at 0.6973, while the 100-period SMA at 0.6964 remains a key structural backstop that would need to give way to signal a deeper corrective phase.

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