AUD/USD renews two-week top beyond 0.7400 despite Ukraine-led market fears, PBOC status-quo

• AUD/USD bulls approach monthly high during the five-day uptrend.
• PBOC left benchmark LPR rates unchanged after keeping MLF rates intact the last week.
• Ukraine rejects Russian demand to surrender Mariupol, China’s Evergrande suspends trading in Hong Kong.
• Risk-off fails to propel USD as Japan’s holiday limits bond moves in Asia.

AUD/USD takes the bids around 0.7425 to refresh a fortnight high, also extending the previous four-day uptrend during Monday’s Asian session.

In doing so, the Aussie pair ignores challenges to the market sentiment emanating from Ukraine and China while cheering the People’s Bank of China’s (PBOC) inaction, as well as softer US dollar.

The People’s Bank of China (PBOC) matched wide marked expectations to keep the benchmark interest rates unchanged. As per the latest policy move, the one-year Loan Prime Rate (LPR) was kept at 3.7% while the five-year counterpart remained unchanged at 4.6%.

Elsewhere, Ukraine’s rejection of Russia’s demand of surrendering Mariupol joins the increasing covid numbers in China and a suspension of trading in Hong Kong by the troubled real estate firmer Evergrande to weigh on the risk appetite. Also challenging the market’s mood are the US patriot missiles that head to Saudi Arabia on request to battle Yemeni Houthis.

Amid these plays, the S&P 500 Futures drops 0.20% whereas the Asia-Pacific shares trade mixed amid a holiday in Japan and a light calendar elsewhere.

It’s worth noting that Fed Chair Jerome Powell’s hopes of easing inflation on the US dollar during the last week despite the 0.25% rate-hike and signals for six such moves in 2022.

Looking forward, this week’s speech from Fed’s Powell and US President Joe Biden’s meeting with the North Atlantic Treaty Organization (NATO) allies will be crucial for short-term AUD/USD moves. Talking about data, Chicago Fed National Activity Index for February, expected to ease to 0.29 from 0.69, will decorate the calendar.

Technical analysis

The AUD/USD pair’s successful trading above the 200-DMA and a downward sloping trend line from May, respectively around 0.7300 and 0.7275, keep the pair buyers hopeful.

That said, an upward sloping resistance line around 0.7480, forming part of the stated wedge, restricts the short-term upside of the Aussie pair.