AUD/USD recovers intraday losses, moves back above 0.7400 ahead of Powell’s speech

• Rising commodity prices assisted the resources-linked aussie to attract some dip-buying on Monday.
• The Fed’s hawkish outlook, elevated US bond yields underpinned the USD and might cap the upside.
• The Ukraine crisis weighed on investors’ sentiment and might further keep a lid on gains for AUD/USD.

The AUD/USD pair recovered a major part of its modest intraday losses and was last seen trading in the neutral territory, just above the 0.7400 round-figure mark.

The pair attracted some dip-buying near the 0.7375 region and has now moved well within the striking distance of the two-week high touched earlier this Monday. A fresh leg up in commodity prices turned out to be a key factor that benefitted resources-linked currencies, including the aussie. That said, a combination of factors might hold back bulls from placing aggressive bets and cap gains for the AUD/USD pair, at least for now.

Investors remain nervous amid the worsening situation in Ukraine, which was evident from a softer tone around the equity markets. This, in turn, drove some haven flows towards the safe-haven US dollar and might keep a lid on any meaningful upside for the perceived riskier Australian dollar. Apart from reviving safe-haven demand, the buck was further underpinned by the Fed's hawkish outlook and a fresh leg up in the US Treasury bond yields.

It is worth recalling that the Fed announced the start of the policy tightening cycle last week and indicated that it could raise rates at all the six remaining meetings in 2022. Moreover, various FOMC members have backed the case for a more aggressive policy stance by the US central bank to combat stubbornly high inflation. This assisted the yield on the benchmark 10-year US government bond to stand tall near the highest level since June 2019.

Hence, the market focus will be on Fed Chair Jerome Powell's scheduled speech later during the US session. Apart from this, traders will take cues from fresh developments surrounding the Russia-Ukraine saga, which will continue to play a key role in driving the broader market risk sentiment. This, along with the US bond yields, might influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.

Technical levels to watch