AUD/USD Retreats Amid Invasion-Related Anxiety

Benefitted from the Reserve Bank of New Zealand (RBNZ) 25 bps rate hike and its hawkish move forward guidance, the AUD/USD climbs to fresh monthly highs, around 0.7280.

A sudden swing in the market mood due to elevated tensions in Ukraine decreased appetite for risk-sensitive currencies like the AUD. At the time of writing, the AUD/USD is trading at 0.7243.

In the meantime, the US Dollar witnessed fresh flows into it, as the US Dollar Index, a gauge of the greenback’s value against a basket of its peers, edges up 0.10%, sitting at 96.12.

Explosions were heard at the Donetsk airport. Interfax reported that Ukrainian government websites are reportedly under cyberattack, including Ukrainian banks. It is worth noting that Ukraine declared a state of emergency on Wednesday of 30 days and urged citizens to flee Russia.

At the same time, Russia closed its embassy in Ukraine and evacuated the staff. That weighed on the AUD/USD pair, as depicted by the 40-pip drop from daily highs, but found support near the 10 February high at 0.7245, a crucial support level for AUD bulls in the event of extending the uptrend.

In the Asian session, the Australian economic docket featured the Wage Price Index (WPI) for Q4 of 2021. The headlines aligned with expectations at 0.7% q/q, while the year-over-year figure came at 2.3%, short of the 2.4 estimations.

The AUD/USD retracement from Wednesday’s daily highs left a long up-wick depicted by the candle in the daily chart, indicating that traders’ book profits and sellers could have opened fresh short bets.

A move below February 10 high at 0.7245 could exacerbate a move towards a three-month-old downslope support trendline, around the 0.71.80-95 area, but first AUD/USD sellers would need a clear break below 0.7200.