AUD/USD clings to gains near 0.7200 mark, limited upside potential amid geopolitical risks

• AUD/USD caught fresh bids on Friday and built on the overnight bounce from the two-week low.
• The Russia-Ukraine crisis underpinned the safe-haven USD and capped the perceived riskier aussie.
• The focus will remain on the outcome of the NATO summit and the incoming geopolitical headlines.

The AUD/USD pair maintained its strong bid tone heading into the North American session and was last seen trading near the daily high, just above the 0.7200 mark.

The pair regained positive traction on the last day of the week amid some technical buying following the overnight strong rebound from the 0.7100-0.7090 static support. Apart from this, the uptick lacked any obvious fundamental catalyst and remained capped amid the worsening situation in Ukraine, which acted as a tailwind for the US dollar.

In the latest development, Ukrainian media reported Russian forces have entered the Obolon district, which is approximately 10 km from Kyiv - the capital city. Adding to this, calls to disconnect Russia from the so-called SWIFT global payment system kept investors on the edge and extended support to safe-haven assets, including the buck.

Meanwhile, Russia's Foreign Minister Sergei Lavrov said that they want the Ukrainian people to be independent and have the possibility to freely define their destiny. Lavrov further added that Russia will ensure the demilitarisation of Ukraine but sees no possibility of recognising the current Ukrainian government as democratic.

Lavrov also said that Ukrainian President Volodymyr Zelenskiy was lying that he was ready to discuss the neutral status of Ukraine. This dashed hopes for a ceasefire and continued weighing on investors' sentiment, which was evident from the prevalent cautious mood around the equity markets and warrants caution for bullish traders.

Investors now look forward to the outcome of an extraordinary virtual summit of NATO Heads of State and Government. Apart from this, the incoming headlines surrounding the Russia-Ukraine saga will influence the broader market risk sentiment, which, in turn, will influence the USD demand and provide some impetus to the AUD/USD pair.

Technical levels to watch