• AUD/USD regained positive traction on Monday, though the uptick lacked bullish conviction.
• Hawkish Fed expectations, the Ukraine crisis underpinned the safe-haven USD and capped gains.
• Investors also seemed reluctant to place directional bets ahead of the RBA decision on Tuesday.

The AUD/USD pair maintained its bid tone through the early North American session and was last seen hovering near the daily high, just above the 0.7500 psychological mark.

The pair attracted fresh buying on Monday and inched back closer to the top end of a near two-week-old trading range, though the uptick lacked bullish conviction. The uncertainty over Ukraine continued acting as a tailwind for commodity prices, which, in turn, extended some support to the resources-linked Australian dollar.

In the latest developments, Ukraine accused Russian forces of carrying out a massacre in the town of Bucha. This prompted German Defence Minister Christine Lambrecht to say that the European Union should talk about ending Russian gas imports. Moreover, Germany and France said that a new round of sanctions targeting Russia was needed.

This comes on the back of the lack of progress in the Russia-Ukraine peace negotiations, which tempered investors' appetite for perceived riskier assets. Apart from this, expectations that the Fed would adopt a more aggressive response to combat high inflation underpinned the US dollar and capped gains for the perceived riskier aussie.

The markets have been pricing in a 100 bps Fed rate hike move over the next two meetings. Hence, the focus will remain glued to the FOMC meeting minutes, scheduled for release on Wednesday. Investors will look for fresh clues about the pace of the policy tightening by the US central bank, which, in turn, will drive the USD demand.

In the meantime, traders also seemed reluctant to place aggressive bets and preferred to wait on the sidelines ahead of the Reserve Bank of Australia (RBA) policy decision on Tuesday. This makes it prudent to wait for some follow-through buying before positioning for an extension of the recent strong bullish run from the YTD low.

Technical levels to watch