AUD/USD remains on the defensive below 0.7200 mark amid broad-based USD strength

• A combination of factors prompted some selling around AUD/USD on Tuesday.
• Global growth concerns weighed on the risk-sensitive aussie amid stronger USD.
• The downside remains cushioned ahead of this week’s important macro releases.

The AUD/USD pair attracted some dip-buying near the 0.7160 area on Tuesday and inched back closer to a near four-week high touched earlier during the Asian session. The pair was last seen trading just a few pips below the 0.7200 mark, nearly unchanged for the day.

Hopes that the easing of COVID-19 restrictions in China would boost the global economy overshadowed the latest official Chinese PMIs, which showed contraction in both manufacturing and services sectors. The optimism was evident from a goodish intraday bounce in the US equity futures, which, in turn, was seen as a key factor that offered some support to the risk-sensitive aussie.

The Australian dollar was further supported by the Reserve Bank of Australia's hawkish signal that a bigger interest rate hike is still possible in June amid the upside risks to inflation. That said, resurgent US dollar demand held back traders from placing aggressive bullish bets around the AUD/USD pair and kept a lid on any meaningful upside, at least for the time being.

The US dollar made a solid comeback from over a one-month low touched on Monday amid a sharp spike in the US Treasury bond yields, bolstered by the hawkish comments from Fed Governor Christopher Waller. Speaking at an event in Frankfurt, Waller backed the case for a 50 bps rate hike for several meetings until inflation eases back toward the central bank’s goal.

Investors also seemed reluctant and preferred to wait on the sidelines ahead of this week's important macro releases, starting with the Conference Board's US Consumer Confidence Index on Tuesday. The focus would then shift to the quarterly Australian GDP report and the US ISM Manufacturing PMI on Wednesday. This will be followed by the ADP report and the closely watched monthly jobs report (NFP) from the US on Thursday and Friday, respectively.

Technical levels to watch