AUD/USD remains depressed below 0.7200 as Russia-linked fears escalate

• AUD/USD flirts with intraday low, probes the positive week-start after three-week uptrend.
• Risk appetite sours as the West prepares for sanctions against Russia.
• Upbeat Aussie PMI, absence of US/Canadian traders earlier favored buyers.
• Return of full markets, US PMI and RBA’s Kent eyed for fresh impulse.

AUD/USD fails to extend the week-start gains amid fresh risk-aversion wave, taking offers around 0.7170 during Tuesday’s Asian. The pair rose for the last three weeks and offered a positive start to the current week before the latest rush to risk-safety weighed on the quote.

Russian President Vladimir Putin’s ordering of troops inside Eastern Ukrainian states, in the same of peacemaking, recently triggered the market’s risk-off mood. Sentiment previously sours as Putin recognized Donetsk and Luhansk in Eastern Ukraine as independent states and signed a decree "on friendship and cooperation".

While checking Russian President Putin’s latest moves, the Western warnings of Moscow’s readiness for an imminent invasion of Ukraine gain more accolades and spoil the mood. Also negative for the risk appetite are the latest actions by the US, EU, Canada and the UK to criticize the Russian actions.

That said, the UK and Canada are bracing for fresh sanctions on Russia while Japan hints to stop the chip exports to Moscow if it invades Ukraine. Elsewhere, Australia PM Scott Morrison said that they will be in lockstep with allies on sanctions on Russia.

Read: UK PM Johnson to chair COBRA meeting, Canada, US prepares economic sanctions over Russian actions

While portraying the mood, the S&P 500 Futures drop nearly 2.0% intraday by the press time and the US Dollar Index (DXY), as well as gold, benefits from the rush to risk-safety.

On Monday, AUD/USD cheered upbeat sentiment and stronger Aussie PMIs amid US Presidents’ Day holiday. Risk-tone initially improved on news that the US agreed on the Biden-Putin summit before Russian President Putin signaled no concrete plans for the summit. It’s worth noting that the Commonwealth Bank of Australia released Aussie PMIs for February and the Composite figures grew strong to 55.9 versus 46.7 in January.

It should be noted that the recent Fedspeak has gone softer and weighed on the Fed Fund Futures, which in turn challenge AUD/USD bears.

Moving on, the Reserve Bank of Australia (RBA) policymaker Christopher Kent is up for a speech and may offer immediate direction to the AUD/USD prices, as well as the return of the US and Canadian traders. However, major attention will be given to the US PMIs for February and the risk catalysts.

Read: US Markit PMIs Preview: Services sector has room for upside surprise, boosting the dollar

Technical analysis

A three-week-old ascending trend line near 0.7150 puts a floor under short-term AUD/USD downside before directing the bears towards the 0.7100 threshold and the monthly low near 0.7050.

Alternatively, bulls remain absent until the quote crosses the 100-DMA level surrounding 0.7240.