AUD/USD hovers around yearly top past 0.7500 with eyes on Ukraine, yields

• AUD/USD bulls await fresh catalysts at 2022 peak, retreats after three-day uptrend.
• Australia follows the West to announce fresh sanctions on Russia, Belarus.
• Market sentiment dwindles as geopolitical, inflation fears join firmer equities, gold.
• Light calendar in Asia may allow traders to consolidate recent gains.

AUD/USD dribbles around 0.7510-20 but stays close to the four-month high during Friday’s Asian session. The risk barometer pair struggles to find traction following a three-day uptrend to refresh the yearly peak.

The market sentiment recently worsened as Australia levied fresh sanctions on Russia and Belarus while taking clues from the Western leaders who criticized Moscow’s invasion of Kyiv the previous day. Australian Foreign Minister Marise Payne announced fresh punitive measures on Belarusian President Lukashenko and members of his family, in addition to unveiling sanctions on Russian diplomats.

On Thursday, US President Joe Biden’s European visit offered multiple macros suggesting the Western readiness for more sanctions for Russia but the bloc’s leaders and other G7 members showed mixed reactions. That said, US President Biden pushed for removing Moscow from the Group of 20 (G20) whereas the North Atlantic Treaty Organization (NATO) members criticized the Russian invasion of Ukraine, as well as China’s friendly relations with Russia, by offering battle groups to defend Kyiv. It’s worth noting that the Russian Foreign Ministry denounced NATO’s artillery help to Ukraine and turned down the US decision to levy sanctions on gold transactions with the Russian central bank.

The fears underpinned gold prices to renew weekly top around $1,960 while the lowest weekly prints of US Jobless Claims since 1969 favored equities to rebound. With this, the AUD/USD prices could ignore firmer yields and refresh yearly highs.

That said, Wall Street ended Thursday on a positive note after snapping a six-day uptrend the previous day while the US 10-year Treasury yields remained firmer around 2.37% by the end of Thursday’s North American session. However, the S&P 500 Futures remain pressured of late, down 0.05% around 4,510 by the press time.

To sum up, challenges to sentiment may test AUD/USD prices but firmer gold can keep buyers hopeful. However, recently covid woes from China and Europe, as well as global dislike for China’s ties with Russia, may trigger consolidation of the weekly gains.

Technical analysis

Although an upward sloping trend line from mid-March restricts immediate AUD/USD declines around 0.7490, the October 2021 peak surrounding 0.7560 challenges the bulls.