AUD/USD hit a six-day peak and bulls appear ready to test the 76.4% Fib of 0.7025-0.6832, 55-DMA, daily cloud base and possibly June's 0.7025 high ahead of this week's G20 meeting.
Downbeat results from U.S. May new home sales nLNSPHEF5W and June consumer confidence nN9N21F02P fueled AUD/USD gains, as the data drove eurodollar and fed funds futures prices higher, suggesting increased chances of Fed rate cuts.
The U.S. Treasury yield curve also shifted lower, allowing for tighter Australian-U.S.
The move down for the U.S. rate complex could be a sign that the Fed could embark on an aggressive rate cut path.
Short-term rates markets in the U.S. now price in nearly 80 bps of Fed cuts by December 2019 FEDWATCH.
Australian rates markets have just over 55 bps of cuts for the same time period RBAWATCH.
The disparity in the pace of expected cuts should keep the greenback on the defensive against the aussie.
Elevated net-short aussie positions should benefit longs as well. If this week's G20 see even the slightest progress made on U.S.-Sino trade relations, risk assets and high beta currencies like the aussie should rally. A rise above June's high would leave the market targeting 0.7070 resistance and the 200-DMA.