AUD/USD hits fresh two-week highs above 0.6900

• US dollar consolidates daily losses for the third consecutive day.
• Risk appetite weighs on the greenback, S&P rises 1.97%.
• AUD/USD back above key SMA, breaks short-term downtrend line.

The AUD/USD climbed above 0.6800 for the first time in more than two weeks, supported by a weaker US dollar and as stocks rise 2% in Wall Street.

From RBA to risk appetite

Early on Tuesday, the Reserve Bank of Australia (RBA) released the minutes of its latest policy meeting. The central bank noted that the current level of the cash rate is well below the lower range of estimates for the nominal neutral rate. This suggests that further increases in interest rates will be needed to return inflation to the target over time.

“Given the rapid fire developments and stronger data outcomes, this implies that the RBA's forecast rate path is unlikely to resemble anything like 'business as usual' as the RBA Governor may have preferred. As such, we will watch for his replies on the possibility of a 75bps move at the August meeting”, explained analysts at TD Securities.

The minutes offered a modest impulse to the aussie that later received a stronger boost from a board-based dollar slide. The greenback continues to correct lower from multi-year highs as market sentiment improves further.

The AUD/USD peaked during the American session at 0.6908, reaching the highest level in twenty days.

Back above the 20-day SMA

The current rally pushed the price above the 20-day Simple Moving Average and of a short-term downtrend line. While above 0.6840, the outlook seems positive for the aussie. A slide below would point to further weakness, possibly falling to 0.6760.

The daily chart shows the RSI and Momentum moving higher, supporting the current recovery from multi-year highs.

AUD/USD daily chart