AUD/USD eases from six-week top towards 0.7200 as Russia-Ukraine jitters sour sentiment

• AUD/USD retreats after refreshing multi-day top, pausing three-day uptrend of late.
• Wednesday’s initially upbeat mood spoiled as Ukraine declared state of emergency, as well as chatters over Russian troops.
• Aussie wage price data came in stronger but below RBA’s target, Fed’s Daly sounds cautiously optimistic.
• Aussie Private Capital Expenditure, second reading of US Q4 GDP will decorate calendar.

AUD/USD holds lower ground near 0.7230, following a pullback from a six-week high, as market sentiment sours on escalating fears of the Russia-Ukraine war. In doing so, the Aussie pair pauses three-day uptrend during the early Thursday morning in Asia.

The risk barometer pair rallied to the highest since mid-January the previous day before reversing from 0.7285 as the odds of an imminent Russian invasion of Ukraine gained pace, backed by the US intelligence. Also keeping the risk higher were cyber-attacks on Ukrainian banks and the government.

It’s worth noting that Kyiv recently declared a 30-day state of emergency and Foreign Minister Dmtryo Kuleba also requested an emergency meeting of the United Nations (UN) Security Council. Furthermore, satellite imagery company Maxar conveyed new deployments of Moscow’s troops in western Russia.

Such headlines weighed on the AUD/USD prices and probe the previous three-day uptrend.

In addition to the geopolitical fears, cautiously optimistic Fedspeak also contributed to the AUD/USD pair’s latest pullback. Recently, San Fransisco Fed President Mary Daly said on Wednesday that interest rates will be moving up this year to a level more consistent with where the economy is, according to Reuters. "It's too early to call how far rates will need to rise this year,” the policymaker added.

At home, Australia’s Wage Price Index for the fourth quarter (Q4) closely missed the 2.4% YoY forecast despite crossing 2.2% previous readout with a 2.3% level. The wage price gauge matched 0.7% expected figures on MoM. That said, the Construction Work Done contracted to -0.4% from -0.3%, versus +2.5% market consensus, during the stated period.

Given being in the driver’s seat, AUD/USD traders need to pay attention to the geopolitical headlines due to their recent fame. Talking about data, Australia Private Capital Expenditure for Q4, expected +2.6% versus -2.2% prior, will direct immediate moves ahead of the second reading of the US Q4 GDP, expected 7.0% versus 6.9% prior.

Technical analysis

Failures to provide a daily closing beyond the 100-DMA and a descending trend line from mid-November, respectively around 0.7240 and 0.7275, keep AUD/USD buyers cautious. However, sellers need validation from a four-month-old previous resistance line, close to 0.7180 for re-entry.