- AUD/USD is consolidating the recent bounce from 0.7150.
- Risk sentiment improves on hopes of diplomacy on tensions in Ukraine.
- AUD is at risk to the upside, 50 day SMA should stay strong on a daily close.
AUD/USD is struggling to break above the 0.7200 level. At time of writing, the pair pulls back from daily highs of 0.7227 and remains firm near previous day’s highs, looking to extend the move higher.
Despite minor retracement from daily highs of 0.7227, Australian dollar remains firm amid stable risk sentiment following Thursday’s broad market decline on news of Ukraine gunshots and US warnings of impending invasion Russian.
Investors took solace in the announcement of a meeting between US Secretary of State Antony Blinken and his Russian counterpart Sergei Lavrov later next month, sparking a ray of optimism for diplomacy and de-escalation.
However, the latest news out of eastern Ukraine tempered the upbeat sentiment somewhat, as bulls in the pair take a breather ahead of a meeting between US President Joe Biden and other international leaders to discuss a possible war situation, regarding Russia and Ukraine.
Meanwhile, the US dollar is holding steady, with the rally capped by fading expectations of a 50bp rate hike from the Fed in March and geopolitical tensions.
Technically, AUD/USD needs to break above Thursday’s high of 0.7218 to challenge the 100-day moving average at 0.7244.
The next relevant positive target for AUD/USD bulls is seen at the Jan 20 highs of 0.7277.
The 14-day RSI is moving slightly higher above 50, which suggests that the pair’s bullish bounce is likely to extend.
AUD/USD daily chart
On the other hand, the bears need a daily close below the 50-day moving average, now at 0.7174, to resume Thursday’s pullback.
Further down, the 0.7150 low will be tested, opening the doors towards the slightly bearish 21 SMA at 0.7132.
AUD/USD additional levels
Source: Fx Street
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