AUD/USD finds support near 0.7300 mark on Russian President Putin’s comments

AUD/USD finds support near 0.7300 mark on Russian President Putin’s comments
  • AUD/USD witnessed fresh selling on Friday and snapped two successive days of the winning streak.
  • Dovish remarks by RBA Governor Lowe, modest USD strength exerted some downward pressure.
  • A goodish recovery in the risk sentiment helped limit further losses for the perceived riskier aussie.

The AUD/USD pair recovered a few pips from the daily low, around the 0.7300 mark touched in the last hour and was last seen trading around the 0.7325 region.

The pair struggled to capitalize on its gains recorded over the past two trading sessions and witnessed some selling on Friday in reaction to dovish-sounding remarks by the RBA Governor Philip Lowe. During his opening address to the Australian Banking Association, Lowe said that the RBA will not be pressured by financial markets to raise interest rates until prices are rising at a sustainable pace.

Apart from this, some intraday US dollar buying exerted additional downward pressure on the AUD/USD pair. That said, hopes of a diplomatic solution to the Ukraine crisis lifted the global risk sentiment and acted as a headwind for the safe-haven greenback. The optimism was fueled by comments from Russian President Vladimir Putin, saying that there are certain positive shifts in talks with Ukraine.

The latest developments triggered a goodish move up in the equity markets, which, in turn, extended some support to the perceived riskier aussie. The risk-on mood, along with firming expectations for an imminent start of the policy tightening by the Fed pushed the US Treasury bond yields higher. This should act as a tailwind for the USD and keep a lid on any meaningful upside for the AUD/USD pair.

Hence, it will be prudent to wait for some follow-through buying before confirming a near-term bullish bias amid the risk of a further escalation in tensions between Russia and the West. In fact, US President Joe Biden is set to call for an end of normal trade relations with Russia later this Friday, alongside the Group of Seven nations and European Union leaders.

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