AUD/USD rallies 1.5% on the day to reach 0.6920 area

• AUD/USD regains lost ground and rallies 1.5% to 0.6920 area.
• The aussie appreciates on the back of RBA’s comments and US dollar weakness.
• The bullish reversal might drive the pair towards 0.7032 – Credit Suisse.

The Australian dollar is being one of the best performers of the G-10 currencies today, staging a 1.5% rally against a somewhat weaker US dollar. The aussie has bounced from 0.6805 lows to pare losses from four consecutive negative days and return to levels above 0.6900.

The RBA and a softer dollar lift the aussie

Philip Lowe, the Governor of the Reserve Bank of Australia has buoyed the AUD on Monday, discarding that the recent strength of the currency might pose a problem to the economy. Lowe has also assured that Australia has "a fantastic set of underlying fundamentals" and that therefore, the economic impact of the COVID-19 pandemic will not be as bad as expected.

This has fuelled AUD demand further which has also been favoured by US dollar weakness. The decline of US treasury yields, with the 10-year bonds down nearly 3% on the day has weighed on the dollar, which went south against its main peers.

AUD/USD: Above 0.6777/75, the next target is 0.7032 – Credit Suisse

The FX analysis team at Credit Suisse observes that the pair has found support at 0.6815 which opens the doors for a retest of 0.7032, “AUD/USD has seen weakness come to a halt at the 21-day exponential average at 0.6815 once again for a rebound to the upside, maintaining the market’s bullish ‘reversal day’ (…) Resistance is now seen initially at 0.6912/23, then .6957/77, ahead of 0.7005, removal of which would see a renewed test of 0.7032/41 and 0.7063 in due course.”