AUD/USD Price Analysis: Battles 0.7200, upside remains favored above 50-DMA

• AUD/USD is consolidating the recent rebound from 0.7150 levels.
• The risk sentiment fares better on hopes for diplomacy over Ukraine tensions.
• The aussie risks upside, 50-DMA support should hold fort on a daily closing basis.  

AUD/USD is battling 0.7200, trimming a minor portion of its Asian advance, as bulls turn cautious heading into European trading.

Despite the minor pullback from daily highs of 0.7210, the aussie remains well bid amid a stabilizing risk sentiment following Thursday’s broader market sell-off on the Ukrainian firing news and US’ warnings over an imminent Russian invasion.

Investors found comfort from the announcement of a meeting between US Secretary of State Antony Blinken and his Russian counterpart Sergey Lavrov late next, sparking a ray of optimism for diplomacy and de-escalation.

However, the latest reports of selling in East Ukraine somewhat tempered the upbeat mood, as bulls take a breather ahead of the meeting between the US President Joe Biden and other international leaders to discuss a potential war-like situation, concerning Russia and Ukraine.

Meanwhile, the US dollar extends its subdued trading activity, with the upside capped by receding expectations of 50-basis points March Fed rate hike and geopolitical tensions.

Technically, AUD/USD needs to clear Thursday’s high of 0.7218 to challenge the horizontal 100-Daily Moving Average (DMA) at 0.7244.

The next relevant upside target for AUD bulls is seen at the January 20 highs of 0.7277.

The 14-day Relative Strength Index (RSI) is looking slightly north while above 50.00, suggesting that the rebound is likely to extend going forward.

AUD/USD: Daily chart

On the flip side, bears need a daily closing below the 50-Daily Moving Average (DMA), now at 0.7174 to resume Thursday’s pullback.

The previous day’s low of 0.7150 will be tested thereafter, opening floors towards the mildly bearish 21-DMA at 0.7132.

AUD/USD: Additional levels to consider