AUD/USD flirts with 0.7400 as hawkish Fedspeak, Ukraine crisis test bulls ahead of RBA’s Lowe

• AUD/USD seesaws around two-week top after the week-start advances.
• Aussie Treasury yields rallied to three-year high, US bond coupons jumped as Fed speakers uttered faster rate hikes, inflation fears.
• Ukraine President Zelenskyy said no immediate solution possible on occupier territory.
• Speech from RBA’s Lowe will provide immediate direction, Fed’s Powell, risk catalyst eyed as well.

AUD/USD remains sidelined around the highest levels in two weeks, despite the recently sluggish moves near the 0.7400 threshold. That said, the quote snapped a four-day uptrend on Monday before trading mostly sluggish during Tuesday’s early Asian morning.

The Aussie pair witnessed a softer start to the week, after witnessing the bull’s play in the last, as comments from the Federal Reserve (Fed) policymakers and geopolitical fears from Ukraine, as well as anti-risk moves in China, challenge the bulls. Also testing the pair’s immediate moves is the cautious sentiment ahead of the Reserve Bank of Australia’s (RBA) Governor Philip Lowe at the Walkley Awards for Business Journalism.

Atlanta Fed President Bostic and Richmond Fed’s Barkin initially promoted the US central bank’s ability to restrain inflation, indirectly signaling a faster pace of the rate hike. The comments got additional back up from Fed Chair Jerome Powell who said, “The Fed will raise rates by more than 25bps at a meeting or meetings if necessary.”

It’s worth noting that the hopes of faster monetary policy normalization propelled the US Treasury yields and weighed on the Wall Street benchmarks, also fueling the Aussie bond coupons to refresh multi-month high around 2.7% of late.

However, the US dollar failed to cheer the comments despite posting the second positive daily close.  It’s worth noting that February’s Chicago Fed National Activity Index rose past 0.29 expectations to 0.51, versus 0.59 prior (revised).

Elsewhere, the People’s Bank of China (PBOC) announced no change in the monetary policy and parted ways from the global bankers, which in turn joined firmer gold prices to help the AUD/USD battle with the bears. On the contrary, record high daily covid infections from China and fresh geopolitical fears from Saudi Arabia exert additional downside pressure on the quote.

In the case of the Ukraine-Russia crisis, Kyiv Leader Volodymyr Zelenskyy recently mentioned that No immediate decision is possible on occupied Ukrainian territory per Interfax. Additionally, US President Joe Biden also cited fears of a cyberattack against the US.

Despite multiple challenges to the sentiment, AUD/USD traders await comments from RBA Governor Philip Lowe amid hopes of witnessing any changes in the bias from the RBA Minutes that backed no rate hike.

Technical analysis

Unless declining back below 0.7370, AUD/USD remains on the way to challenge a horizontal resistance area from October 2021 around 0.7430-40.