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The Australian dollar rushed to a comeback in overnight trade, which finds support from a pullback in US bond yields, including profit-taking in the US dollar and the rallying prices in iron ore, suggesting Australia’s largest goods export by dollar value.          

These factors had underpinned the AUD/USD pair to surge from a low of 0.7578 in Asian trading to climb as high as 0.7632 capped during the second half of US trading. Additionally, it settled at 0.7624, suggesting its peak level since October 3.

Stronger Commodity Prices

With the stronger Aussie due to stronger commodity prices, along with the initial impact of the US Federal Reserve rate hike timing, the Australian currency changed hands at $76.26 up from $76.15 during Friday’s close of trade.   

Given the continued rally in copper and Iron ore, it is likely that Australia’s largest commodity is giving a lift on the Aussie followed by Fed president Janet Yellen comments, citing a high-pressure economy could be the way forward in the US.

Along with the positive results in commodity markets and stocks, a senior currency strategist at the Commonwealth Bank expound that comments from the US Fed Chair Janet Yellen and with the declining September US retail sales report has sent Aussie to climb.

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Hence, it is likely that a path may be followed to sustain the unemployment rate and increase consumer confidence despite seeing potential risks of inflation.

In essence, the market has taken the Fed chair’s comments as a sign that interest rates would be left unchanged for longer term, while the potential rate hike in December declined approximately 64 percent after the speech.        

Strategist Sean Callow said, "The Aussie is tracking well against the US dollar and is outperforming a range of currencies,including the Kiwi and the Euro."

Current Stance of AUD/USD Pair

The chart below illustrates the currency pair’s stance amid stronger commodity prices and the Fed chair comments, which added an optimism for interest rates to remain lower.

It seemed that price actions are showing a stronghold in a comeback after the currency pair tried to break out on the upside on October 12 at support 0.75511. The pair showed an upward trend and finished on the green in five straight sessions, reaching a peak level of 0.76876.

In addition, the pair tried to break out on the upside at resistance 0.76616, but is significantly away to finally hit above the resistance level.           

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Conclusion

As the Australian dollar finds support on the strengthening commodity prices, we conclude that the pair will continue to rally if the next session will hit above the resistance level. Moreover, market participants should wait on the sidelines as there isn’t supporting candle as of the moment.    

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