AUD/USD's rally from June's 0.6832 low hit an eight-day high today after the 55-DMA limited the downside in overnight trade.
Longs are gaining some confidence on interest rate expectations and technical studies ahead of the G20 meeting.
Australian short-term rates markets have pared back expectations for RBA cuts.
Prices for short-term rates products have fallen recently, which have lowered the probability of a July 2 RBA cut to 72% and now suggest only 50bps of RBA cuts by the end of 2019 RBAWATCH.
U.S. short-term rates markets still price in 70bps of cuts by December 2019.
The disparity of expectations is probably helping to boost AUD/USD.
Technicals highlight the topside risks.
Daily and monthly RSIs suggest bulls have momentum, a June monthly bull hammer formed after a close below the 76.4 Fib of 0.6715-0.7295 was elusive while the 55-DMA and daily cloud base provide short-term support.
AUD/USD longs now focus on the G20 meeting. If U.S.-Sino trade tensions ease even slightly risk sentiment should be buoyed. High-beta currencies such as the aussie should benefit.
AUD/USD's rally is likely to extend on the prospects of a better trade environment should U.S. and China tensions ease. If AUD/USD extends its rally and breaks above 0.7225/35 resistance, a test of the 200-DMA and 0.7150/60 resistance is likely.
chart: Click here