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  • With the AUD/USD pair retreating from its 2022 high, it ended a two-day winning streak.
  • Radiation levels increased after Russian troops attacked Ukraine’s nuclear power plant, reviving fears of Chernobyl.
  • No major events are scheduled ahead of the US NFP, but risk catalysts will provide fresh impetus.

The AUD/USD price outlook is still positive as the pair leads among the major currency pairs amid a rise in commodity prices. However, risk aversion is back in full force, supporting the AUD/USD sellers early on Friday. Meanwhile, the Australian pair is playing around mid-0.7300 with a daily gain of 0.33% after updating the daily low at 0.7299. Today, the risk barometer pair reached a new yearly high of 0.7362.

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The shelling of Europe’s largest nuclear reactor by Russia has sparked a fresh wave of risk aversion as it confirms market doubts over Russia-Ukraine peace talks, which concluded in Kyiv the day before on safe passage for civilians. Senator Marco Rubio reported an anonymous second Ukrainian diplomat trying to calm the concerns after a Ukrainian power plant was attacked. There were concerns about higher radiation levels and renewed concerns about Chernobyl.

The senator tweeted: “A second Ukrainian official just confirmed that the plant is not running on fuel, but the administration building is on fire.” “He has no information about increased radiation, says a meltdown is unlikely, but a leak is possible,” he added.

Concerns over a 50-basis Fed rate hike in March have weighed on riskier assets such as AUD/USD. During the second round of testimony the day before, Chair Powell reiterated his support for a rate hike of 0.25%, effectively indicating readiness for a 0.50% rate increase at the March meeting. FedWatch, the CME’s rate hike forecasting tool, predicts an 89% chance of a similar hike at the next Fed meeting. Powell’s comments have encouraged investors to anticipate a similar hike next month.

On Thursday, the latest US ISM Services PMI fell for the third straight month, but the data on second-tier employment and factory orders showed signs of improvement. As for domestically, Australia’s trade balance was positive, but building permits fell sharply in January.

The S&P 500 futures are down about 1.0% on the day, while the US 10-year Treasury yield is down almost six points to 1.78% at press time, which is in line with the sentiment.

The US February jobs report and developments in Ukraine and Russia will be important for the AUD/USD.

AUD/USD price technical outlook: Bulls eying 0.7400

aud/usd outlook

The AUD/USD price remains strong near the yearly highs. Despite posting the buying climax pattern, the pair gives no respite to the sellers. Staying above the mid-0.7300 area may add more fuel to the bulls. We can expect the price to test the 0.7400 handle if the momentum persists.

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Alternatively, profit taking or trend reversal may trigger sell-off. The immediate support for the pair lies at 0.7300 ahead of 0.7250 and then 0.7200.

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