AUD/USD stays pressured towards 0.7350 on firmer yields, risk-aversion

• AUD/USD fades bounce off intraday low, extends pullback from two-week high.
• US 10-year Treasury yields remains strong near three-year top, Aussie bond coupons rally to fresh high since 2018.
• Ukraine-Russia crisis, hawkish Fedspeak exert downside pressure on the sentiment.
• Comments from Fed policymakers, risk catalysts will be crucial to watch for fresh impulse.

AUD/USD sellers attack daily bottom surrounding 0.7380 as sour sentiment and upbeat yields propel the US dollar during early Tuesday. In doing so, the risk-barometer pair extends the previous day’s pullback from a fortnight high.

The US 10-year Treasury yields rise to a fresh high since May 2019 while taking the bids near 2.328% level. At home, the Aussie 10-year bond coupons have also rallied to the fresh top since November 2018.

Underpinning the multi-day high bond coupons are the hawkish comments from the Fed policymakers.  On Tuesday, Atlanta Fed President Bostic and Richmond Fed’s Barkin initially promoted the US central bank’s ability to restrain inflation by indirectly signaling a faster pace of the rate hike. However, the comments from Fed Chair Jerome Powell who said, “The Fed will raise rates by more than 25bps at a meeting or meetings if necessary,” offered a major upside momentum to the T-bond coupons.

Adding to the bond selling are the statements from the International Monetary Fund’s (IMF) Asia-Pacific Director Changyong Rhee who said, “The US has the room to raise interest rates.” IMF’s Rhee also mentioned that Asia’s inflation will peak in Q2 of this year.

Elsewhere, the worsening conditions of the Ukraine-Russia crisis, after Kyiv rejected Moscow’s demand of surrendering in Mariupol, weigh on the market’s mood and AUD/USD prices. Recently, Ukraine President Volodymyr Zelenskyy 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.

Amid these plays, S&P 500 Futures drop 0.30% but Australia’s ASX 200 rise around 1.50% by the press time.

Moving on, risk catalysts and Fedspeak are the key catalysts to watch for the AUD/USD traders.

Technical analysis

AUD/USD pullback remains elusive until staying beyond the 0.7315-10 support confluence including the 100-DMA and an upward sloping trend line from late January. Alternatively, a nine-week-old resistance line lures buyers around 0.7475.