• AUD/USD attracts fresh buyers as the RBA’s hawkish stance continues to underpin the AUD.
• Trade uncertainties and geopolitical risks weigh on the global risk sentiment, capping the pair.
• Reduced Fed rate cut bets support the USD and warrant caution for bulls ahead of the US PPI.

The AUD/USD pair regains positive traction on Friday and climbs back closer to over a two-week top, around the 0.7110-0.7115 region, during the early part of the European session. Spot prices remain close to a two-year peak set earlier this month and seem poised to register gains for the sixth consecutive week.

The Australian Dollar (AUD) continues with its relative outperformance in the wake of an increasingly hawkish outlook for the Reserve Bank of Australia (RBA). In fact, traders are now pricing in the possibility of another interest rate hike by the central bank in May. The bets were reaffirmed by the hot CPI report for January, released earlier this week, underpinning the AUD and supporting the AUD/USD pair.

Meanwhile, investors remain on edge as geopolitical risks remain in play amid a huge American naval and air power buildup in the Middle East. Apart from this, trade uncertainties weigh on the market sentiment and might cap the risk-sensitive Aussie. The US Dollar, on the other hand, remains close to the monthly high amid the US Federal Reserve's (Fed) hawkish outlook and might cap gains for the AUD/USD pair.

In fact, traders trimmed their bets for more aggressive policy easing by the US Federal Reserve (Fed) after minutes from the January FOMC meeting showed that the central bank is in no hurry to cut interest rates further. Moreover, officials discussed the possibility of raising rates if inflation does not cool. This warrants caution for the AUD/USD bulls and before positioning for any further near-term appreciation.

The market focus now shifts to the US Producer Price Index (PPI), due for release later during the North American session. Apart from this, comments from influential FOMC members would drive the USD and provide a fresh impetus to the AUD/USD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the pair is to the upside, and any corrective slides are likely to be short-lived.