- AUD/USD catches some buying at lower levels on Thursday and turns positive for the second day in a row.
- Risk appetite in the markets weighs on the safe haven USD and offers some support to the pair.
- Investors are focused on the US CPI amid hopes for a diplomatic solution to the conflict between Russia and Ukraine.
The pair AUD/USD moves higher during the European session on Thursday and recoups early losses to a daily low of 0.7287. At time of writing, the pair is holding near the daily high, around the region of 0.7340.
after one initial drop to the 0.7290-0.7285 region, the AUD/USD pair captured some buying at lower levels on Thursday and turned positive for the second day in a row. The hopes for a diplomatic solution to end the war in Ukraine continued to support a positive tone around the stock markets. This, in turn, weighed on the safe-haven US dollar and acted as a tailwind for the perceived riskier Australian dollar.
Risk sentiment recovered after Turkey’s top diplomat announced that Russian Foreign Minister Sergei Lavrov and his Ukrainian counterpart Dmytro Kuleba have agreed to meet on Thursday. This would be the first potential talk between the two officials since Russian troops invaded Ukraine on February 24, raising expectations of a compromise, providing much-needed relief to investors.
Having said that, the risk of a new escalation of tensions between Russia and the West could limit the optimistic movement in the markets. Furthermore, concerns of a major inflation shock amid rapidly deteriorating global economic outlook should act as a tailwind for the USD and cap gains for the AUD/USD pair. Therefore, the market focus now shifts to the release of the latest US CPI report on Thursday.
The US consumer inflation figures, due to be released at the start of the American session, along with broader market risk sentiment, could influence price dynamics around the dollar. Aside from this, investors will take cues from new developments surrounding the Russian-Ukrainian war. The combination of factors should further help investors take advantage of some short-term opportunities around the AUD/USD pair.
AUD/USD technical levels
Source: Fx Street
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