AUD/USD eases from daily high, holds steady above 0.7500 mark amid weaker USD

• AUD/USD gained positive traction on Wednesday, though lacked follow-through buying.
• Hopes for peace in Ukraine capped commodity prices and the resources-linked aussie.
• The risk-on mood, sliding US bond yields undermined the USD and extended support.

The AUD/USD pair surrendered a major part of its intraday gains and retreated to the lower end of its intraday trading range during the early part of the European session. The pair was last seen trading just a few pips above the 0.7500 psychological mark, up less than 0.15% for the day..

The latest optimism over the possibility of a breakthrough in the Russia-Ukraine peace negotiations kept a lid on the recent blowout rally in commodity prices. This, in turn, was seen as a key factor that acted as a headwind for the resources-linked Australian dollar, though a broad-based US dollar weakness continued lending support to the AUD/USD pair.

The overnight positive news flow surrounding the Russia-Ukraine saga boosted investors' confidence and dragged the safe-haven USD to over a one-week low. In fact, Russia said that it would scale down military operations around Ukraine's capital and north. Adding to this, Kyiv proposed adopting neutral status and lifted hopes for a diplomatic solution to end the war.

Apart from this, the ongoing sharp retracement slide in the US Treasury bond yields was seen as another factor that undermined the greenback. That said, firming expectations that the Fed would deliver a 50 bps rate hike at the next two meetings to combat stubbornly high inflation should extend some support to the US bond yields and limit losses for the USD.

The fundamental backdrop, along with the AUD/USD pair's inability to capitalize on the recent strong move up, could be seen as the first sign of bullish exhaustion. It, however, will be prudent to wait for some follow-through selling below the overnight swing low, around mid-0.7400s, before confirming that the major has topped out and positioning for any further decline.

Market participants now look forward to the US economic docket, featuring the release of the ADP report on private-sector employment and the final Q4 GDP print. This, along with the US bond yields, might influence the USD. Traders will further take cues from developments surrounding the Russia-Ukraine saga for some short-term opportunities around the AUD/USD pair.

Technical levels to watch