AUD/USD fades corrective pullback below 0.7200 on Russia-Ukraine crisis

• AUD/USD struggles to keep the bounce off two-week low, dropped the most in a month on heavy risk-aversion.
• Russia’s invasion of Ukraine triggered market’s rush to risk-safety, Gold, USD benefited from sour sentiment.
• Chatters over large bombardment on Kyiv recently weigh on market’s mood.
• US Core PCE Inflation, Durable Goods Orders will add burden to watcher’s list.

AUD/USD seesaws around 0.7170 during the early hours of the Asian trading session on Friday, after posting the heaviest daily fall in a month.

Russia’s military attack on Ukraine triggered the flight to safety, which in turn drowned the Aussie pair the previous day, before activating a corrective pullback from a fortnight low on mixed chatters.

Russia finally invaded Ukraine from land, sea and air, without caring for international sanctions. The war conditions propelled the rush to traditional safe-havens like the US dollar and gold, which in turn weighed on the AUD/USD prices. However, the latest updates concerning US sanctions and terms of talks between Russia and Ukraine seemed to have stopped the south-run amid a generally quiet early Asian session.

As per the latest updates, Moscow’s military acquired Chernobyl and Ukraine President Zelenskyy signed a decree for general mobilization. Further, the Western leaders have announced more sanctions for Russia and showed readiness to support Kyiv with military power if conditions worsen.

On the contrary are the comments from Russia, like “Moscow is willing to negotiate the terms of Ukraine's surrender.” Additionally favoring the corrective bounce are the chatters that Ukraine President Zelenskyy said they need to discuss ceasefire with Russia.

It should be noted that the second reading of the US Q4 GDP matched 7.0% annualized forecasts but firmer figures of Personal Consumption Expenditure, Chicago Fed National Activity Index and Jobless Claims seemed to have added to the US dollar’s strength. Also favoring the greenback to stay firmer at the fresh 2022 high are the comments from Atlanta Fed President and FOMC member Raphael Bostic who favored three rate hikes this year. On the same line was Richmond Fed President and FOMC member Thomas Barkin said on Thursday that he hopes the Fed can restore interest rates back to pre-pandemic levels fairly quickly, reported Reuters. However, Cleveland Fed President Loretta Mester said on Thursday that she doesn't think raising interest rates by 50 bps in March is compelling, according to Reuters. 

Amid these plays, Wall Street closed with mild gains after the initial plunge whereas the US 10-year Treasury yields closed more or less at the same level the previous day, after marking a volatile day.

Moving on, CNN’s news that Russia is up for bombardment on Kyiv can exert fresh downside pressure on the AUD/USD prices.

On the data side, US Core PCE Inflation data and Durable Goods Orders may join Fedspeak to offer extra directives to the AUD/USD prices.

Technical analysis

Despite bouncing off a two-week low, AUD/USD prices keep the downside break of a monthly support line, now resistance around 0.7180. As a result, the quote is likely to decline further towards the 0.7100 threshold. It’s worth noting that the 100-DMA level of 0.7238 acts as an extra filter to the north.