AUD/USD Impacted By profit taking

The Australian dollar slumps from YTD highs around 0.7540 as market sentiment fluctuates as a result of developments concerning the Russia – Ukraine’s crisis, China’s Covid-19 outbreak, and higher inflation prompted global central banks to tighten monetary policy conditions.

The AUD/USD pair is trading at 0.7492. The market mood turned positive on Russia – Ukraine ceasefire headlines, and Shanghai entered into lockdown on the Covid-19 outbreak

Risk appetite continues to be influenced by geopolitical factors and the weekend Covid-19 outbreak in China, which affected Shanghai, one of the largest cities, weighed on market sentiment. Meanwhile, Russia – Ukraine woes keep grabbing the headlines.

Late in the North American session, Russia is reportedly prepared to let Kyiv join the EU if it remains military non-aligned as part of ongoing ceasefire negotiations. That headline lifted US equities, which made a U-turn and ended Wall Street’s trading session in the green territory.

Meanwhile, the US Dollar Index stays resilient, up 0.38%, sitting at 99.160, while US Treasury yields fall. Technically, the AUD/USD retreated below the 0.7500 mark in the mid-European session, but late is staging a recovery towards the figure.

On the last three days, the Australian dollar consolidated in the 0.7450-0.7530 range until Monday’s price action, when the pair managed to record a YTD high around 0.7540, retreating afterward.

On the downside, the AUD/USD first support would be 0.7478. A breach of the latter would expose March 7 daily high at 0.7441, followed by 0.7400. Upwards, the AUD/USD’s first resistance would be the 0.7500 mark. Once cleared, the next resistance would be Monday’s daily high at 0.7540, followed by October 28, 2021, a daily high at 0.7555, and then the 0.7600 mark.