AUD/USD reverses a major part of overnight losses, awaits sustained move beyond 0.7200

• AUD/USD gained strong positive traction on Friday and built on the overnight solid rebound.
• A recovery in the risk sentiment undermined the safe-haven USD and extended some support.
• Fears of a further escalation in the Russia-Ukraine conflict might cap the perceived riskier aussie.

The AUD/USD pair extended its steady intraday ascent and climbed to a fresh daily high, back above the 0.7200 mark during the early European session.

Following the previous day's slump and the late rebound from sub-0.7100 levels, the AUD/USD pair caught fresh bids on Friday and was supported by a broad-based US dollar weakness. The market nervousness over the situation in Ukraine eased, at least for now, amid hopes for a likely Russia-Ukraine ceasefire. This, in turn, weighed on the safe-haven US dollar and provided a goodish lift to the perceived riskier aussie.

Russian President's press secretary Dmitry Peskov said on Thursday that Putin was ready to talk with Ukrainian President Volodymyr Zelenskyy if the latter agrees to compromise on Russia’s red line issues. Apart from this, the fact that the new economic sanctions imposed on Russia were not as harsh as feared, further boosted investors' confidence. This was evident from a generally positive tone around the global equity markets.

Signs of stability in the financial markets dragged the USD away from the highest level since June 2020 touched on Thursday and extended support to the AUD/USD pair. That said, the risk-off a further escalation in the geopolitical risks would keep investors' on the edge and act as a tailwind for the buck. This, in turn, warrants some caution before positioning for any further appreciating move for the AUD/USD pair, at least for now.

Market participants now look forward to the US economic docket, highlighting the release of the Fed's preferred inflation gauge - the core PCE Price Index - and Durable Goods Orders. The data, however, might do little to influence the USD price dynamics or provide any meaningful impetus to the AUD/USD pair. The market focus remains glued to developments surrounding the Russia-Ukraine saga and the outcome of an extraordinary NATO summit.

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