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• AUD/USD holds gains as focus shifts to the upcoming release of the RBA Minutes.
• Tensions between the United States and China remain in the spotlight, threatening the demand for the US Dollar.
• Psychological resistance firms at 0.6500, with AUD/USD remaining vulnerable to the key psychological level that is proving difficult to break.

The Australian Dollar (AUD) is trading positively in the early hours of Tuesday's Asian session, while the US Dollar (USD) remains under pressure.

A series of events, including the re-escalation of tensions between the United States and China and renewed threats of tariffs, has led to a significant outflow from the USD, benefiting other currencies, such as the Australian Dollar.

US President Trump, tariffs, and trade wars continue to drive sentiment and demand for the US Dollar
 

US President Donald Trump recently announced that tariffs on steel and aluminum imports will double starting Wednesday. This announcement, along with the release of disappointing economic data on Monday, has added further pressure on the Greenback.

The combination of increasing geopolitical risks, a decline in the US Purchasing Managers' Index (PMI) reading for May, and a break of key technical resistance may continue to support the AUD/USD pair on Tuesday.

Markets began the week with a risk-off sentiment on Monday, following several posts from Trump accusing China of violating the temporary trade agreement established on May 12. In that agreement, both nations committed to enhancing their trade relations. Subsequently, the announcement of additional tariffs on global steel and aluminum imports to the US had a positive impact on the AUD/USD pair, pushing it to the significant psychological level of resistance at 0.6500.

Furthermore, the May ISM Manufacturing Purchasing Managers' Index (PMI), which gauges the health of the US manufacturing sector, declined in May. It missed analyst forecasts of 49.5, registering a reading of 48.5, indicating a weakening manufacturing sector.

RBA Meeting Minutes in focus as AUD/USD tests critical zone of resistance
 

With the Reserve Bank of Australia (RBA) scheduled to release the Meeting Minutes from the May 20 meeting at 01:30 GMT, the release may continue to drive AUD/USD price action. With the Minutes expected to shed light on the economic outlook and near-term Monetary Policy expectations, any surprises, such as the RBA's willingness to slow the pace of rate cuts, may provide an additional catalyst for the AUD/USD pair.

As the 0.6500 level holds firm, Tuesday's developments will be key in determining whether AUD/USD can clear technical resistance or if a correction may be on the horizon, depending on the technical and fundamental developments in both nations.

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