Australian Dollar muted after higher-than-expected US PPI reading

• Trump said on Tuesday that Iran will either “make a good deal” with the US or face devastation.
• US Producer Price Index spikes 6.0% YoY, pushing the USD higher.
• IEA claims Oil inventories are falling faster than expected as the Strait of Hormuz disruption continues.

The AUD/USD pair is trading at a neutral basis near the 0.7250 level after the US Producer Price Index (PPI) for April came in unexpectedly hot.

Separately, United States (US) President Donald Trump threatened Iran ahead of a meeting with Chinese President Xi Jinping.

Trump claimed that Iran will either “make a good deal” with the US or face devastation. The war on Iran, which has sent energy prices soaring because of Tehran’s effective closure of the Strait of Hormuz, will be high on the agenda of the talks between Trump and Chinese President Xi Jinping.

The PPI for April came in well above economists' expectations at 6.0% YoY. Consensus had been 4.9%. This higher reading gave the Greenback some resilience.

Core PPI, which excludes food and fuel, likewise arrived above the consensus of 4.3% at 5.2% YoY and rose 1% MoM.

Oil inventories are falling around the world at a record pace and will continue to drop for months as the disruption to Middle East supplies from the Iran war intensifies, according to a report by the International Energy Agency (IEA).

Global observed Oil inventories declined by about 4 million barrels per day in March and April, according to a monthly report from the agency, which is coordinating the release of emergency fuel stocks by major economies such as the US, Japan and Germany. The market will remain “severely undersupplied” until October, even if the conflict ends next month, the IEA said.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7241, holding a mildly bullish near-term bias as it stays above the 20-period Simple Moving Average (SMA) at 0.7238 and the 100-period SMA near 0.7191. The cluster of nearby supports suggests dips could be contained for now, while the Relative Strength Index (RSI) hovering around 55 hints at steady, but not overstretched, upside momentum.

On the topside, initial resistance appears at 0.7243, ahead of a more notable barrier around 0.7254, where recent supply has emerged. On the downside, the 20-period SMA at 0.7238 forms the first support, followed by horizontal floors at 0.7235 and 0.7234, with the 100-period SMA near 0.7191 reinforcing the broader bullish structure on deeper pullbacks.

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