AUD/USD pulls back below 0.7200, gives away daily gains

• Australian dollar's recovery halts at 0.7225, the pair returns below 0.7200.
• The Aussie loses steam as market sentiment worsens.
• Back below 0.7200, the AUD/USD maintains its near-term bearish bias intact.

The aussie has erased previous gains during Tuesday’s US trading session, pulling back below 0.7200 after hitting intra-day highs at 0.7225. The pair remains flat on the daily chart, tr4ading at 0.7185 at the time of writing.

USD regains lost ground as market sentiment sours

The risk-sensitive Australian dollar has lost ground as hopes of progress about the Russia – Ukraine peace talks faded for the second consecutive day. The fragile market optimism has been shattered after Russia’s President Vladimir Putin’s accused Ukrainian representatives of not being serious to find a mutually acceptable solution.

The market has been rattled by these comments. US stock markets have pulled back from session highs and the US dollar bounced up on safe-haven demand. Beyond that, the Federal Reserve is widely expected to hike rates for the first time in the last three years on Wednesday which is contributing to keeping US dollar weakness in check.

Earlier today, the AUDUSD has attempted to pare losses, after the last two days’ sell-off. The positive Chinese data, with industrial production and retail sales beating expectations in February, and a somewhat softer greenback had been buoying aussie’s demand.

AUD/USD capped below 0.7225 resistance

From a technical point of view, the pair maintains its near-term bearish bias intact as the upside correction has been limited at the 0.7225 area, where previous intra-day support meets the 100-day SMA.

On the downside, below 0.7200 the pair eyes the aforementioned two-week low at 0.7165 before the February 28 low at 0.7140.

On the contrary, another bullish reaction should breach 0.7225, before aiming towards 0.7245 (March 8 low) and the 200-day SMA, at 0.7310 before aiming towards the March 10, 11 highs at 0.7365.

Technical levels to watch