AUD/USD surrenders intraday gains to near two-week high, flat-lined below 0.7400

• AUD/USD struggled to preserve its modest intraday gains to a near two-week high.
• A softer risk tone helped revive demand for the safe-haven USD and capped gains.
• The mixed fundamental backdrop warrants caution for aggressive bullish trades.

The AUD/USD pair witnessed some selling during the early part of the European session and was last seen trading near the daily low, around the 0.7380-0.7375 region.

The Australian dollar continued drawing support from rising bets for an early rate hike move by the Reserve Bank of Australia, boosted by Thursday's upbeat domestic jobs report. Apart from this, hopes that China will deliver additional stimulus to complement its promise to support the economy and stabilize the financial markets boosted antipodean currencies, including the aussie.

The combination of supporting factors pushed the AUD/USD pair to a near two-week high on Friday, though bulls struggled to find acceptance or build on the momentum beyond the 0.7400 mark. The lack of progress in the Russia-Ukraine ceasefire talks tempered investors' appetite for perceived riskier assets. This, in turn, benefitted the safe-haven US dollar and capped gains for the major.

The greenback was further underpinned by the Fed's hawkish outlook, indicating that it could hike rates at all the six remaining meetings in 2022. Moreover, Fed Chair Jerome Powell said that the US central bank could start shrinking its near $9 trillion balance sheet as soon as the next meeting in May. This remained supportive of elevated US Treasury bond yields, which favours the USD bulls.

Traders might also refrain from placing aggressive bullish bets around the AUD/USD pair ahead of a meeting between US President Joe Biden and Chinese leader Xi Jinping. This, in turn, makes it prudent to wait for some follow-through buying before positioning for any further gains and an extension of this week's solid rebound from the 0.6165 region, or the monthly low.

Market participants now look forward to the US economic docket, featuring the release of Existing Home Sales data. The key focus, however, will remain on fresh developments surrounding the Russia-Ukraine saga. Traders will further take cues from the broader market risk sentiment and the US bond yields, which will influence the USD and provide a fresh impetus to the AUD/USD pair.

Technical levels to watch