AUD/USD consolidates its recent gains to YTD peak, holds steady above 0.7500 mark

• AUD/USD extended its sideways consolidative price move on the first day of a new week.
• The recent rally in commodity prices acted as a tailwind for the resources-linked aussie.
• A softer risk tone, hawkish Fed expectations underpinned the USD and capped the upside.

The AUD/USD pair remained confined in a narrow trading band heading into the European session and consolidated its recent strong gains to the YTD peak. The pair was last seen trading in the neutral territory, around the 0.7515-0.7520 region.

A combination of diverging forces failed to provide any meaningful impetus to the AUD/USD pair and led to subdued/range-bound price action on the first day of a new week. The recent blowout rally in commodity prices continued lending some support to the resources-linked Australian dollar, though sustained US dollar buying kept a lid on any meaningful gains.

The greenback drew support from growing acceptance that the Fed would adopt a more aggressive policy response to combat stubbornly high inflation. In fact, the markets have been pricing in a 50 bps rate hike in the May meeting. This, in turn, pushed the yield on the benchmark 10-year US government bond to a fresh two-year high and underpinned the buck.

Apart from this, the prevalent cautious mood further benefitted the greenback's relative safe-haven status. Against the backdrop of the lack of progress in the Russia-Ukraine peace negotiations, the imposition of fresh coronavirus lockdown in China weighed on investors' sentiment. This held back bulls from placing aggressive bets and capped the AUD/USD pair.

There isn't any major market-moving economic data due for release from the US on Monday, leaving the USD at the mercy of the US bond yields. Apart from this, traders will take cues from the broader market risk sentiment. This, along with commodity prices should provide some impetus to the AUD/USD pair and allow traders to grab some short-term opportunities.

Technical levels to watch