Peace Deal Prospect Eases Market Agitation
The AUD/USD currency pair has given up a major chunk of its gains on an intraday level and it has pulled back to the lower side of the intraday trading area in the course of the early European trading session. At the time of putting this news together, the pair was observed trading some very few points over the 0.7500 mark which is psychological. This point of trading is 0.15% less than the daily expectation.
AUD/USD price chart. Source TradingView
The most recent market optimism about the likelihood of achieving a peace deal between Russia and Ukraine has put a lid on the latest blowout rally in the high price of most commodities. This became a major factor that played as a headwind serving the advantage of resource that are linked to the Australian dollar. Although the general weakness of the US dollar kept on giving huge support to the AUD/USD currency pair.
US Dollar Sheds Some Safe-Haven Weight
The positive news that came in overnight with regards to the war going on between Russia and Ukraine gave more confidence to investors and it went ahead to pull the safe-haven US dollar to more than a week’s low point. Russia’s announcement that it would reduce its military activities around Kyiv and redeploy some of its troops from the area also added to investors’ confidence and more hopes of a resolution.
In addition this, Kyiv stated that it would adopt a neutral status hence forth, and it lifted expectations for a diplomatic resolution to see the end of the conflict.
Aside from the stated, the continuous steep pullback slide of the US Treasury bonds yield came to be taken as an additional factor which was undermining the US dollar. Furthermore, the strong expectation that the Federal Reserve would implement a 50 basis points increase in interest rates during its next two meetings to fight the obstinately high inflationary measure. It is also expected to stretch some level of support to the bonds yield and it will limit the losses for the US dollar.
In the basic background, as well as the inability of the AUD/USD currency pair to really capitalize on the latest move upward, it could also be counted as the initial sign of the exhaustion of bullish traders. It will then be a prudent move to observe some follow-up sales under the low points that came overnight at the mid 0.7400 area before it can be confirmed that the pair is on the path of decline.