• AUD/USD picks up bids to extend late Monday’s recovery amid sluggish session.
• AZNAC holidays in Australia, New Zealand to restrict market moves in Asia-Pacific, especially amid light calendar elsewhere.
• Market sentiment dwindles amid cautious mood ahead of key data/events, geopolitical fears and rate hike concerns.
• US Dollar drops despite flat S&P 500, softer yields amid Fed blackout.

AUD/USD stretches the latest rebound towards poking the 0.6700 round figure as it consolidates the previous weekly loss amid Tuesday’s holidays in Australia and New Zealand, amid a light calendar elsewhere.

The Aussie pair’s recent recovery could be linked to the U-turn in equities during Monday’s American session and downbeat US Treasury bond yields. However, challenges to sentiment and cautious mood ahead of this week’s crucial US and Australia statistics prod the Aussie pair buyers. That said, the pre-Fed blackout seems to help the markets in paring the previous weekly gains of the US Dollar.

US Dollar failed to cheer Friday’s upbeat activity data amid hopes of no more than a 0.25% rate hike and nearness to the policy pivot. Also weighing on the greenback could be the drama surrounding the US debt ceiling, which is scheduled for expiration in June. Additionally weighing the greenback could be the comparatively less hawkish Fed speak, as well as upbeat Wall Street. That said, S&P 500 Futures remained mostly flat on Tuesday.

On the other hand, the Financial Times (FT) came out with the news suggesting that allies resist the US plan to ban all G7 exports to Russia, which in turn supports a mild risk-on mood. On the other hand, Eurozone plans to ban exports from Russia.

Amid these plays, Wall Street benchmarks closed mixed while the US 10-year and two-year Treasury bond yields remain mostly downbeat, around 3.50% and 4.12% respectively.

Moving on, a light calendar and off in Australia can restrict AUD/USD moves ahead of this week’s US Q1 2023 GDP, US Core PCE inflation and Australia inflation data. Above all, next week’s RBA and Fed meeting are crucial for markets to watch for clear directions.

Technical analysis

Unless successfully crossing the 21-DMA hurdle of around 0.6705, the AUD/USD pair is well set to visit an upward-sloping support line from early March, close to 0.6650 at the latest.