AUD/USD is up to session highs of 0.7738

The aussie was on the backfoot for the majority part of trading yesterday after news that China is considering to devalue the yuan as a retaliatory tool against the US in the recent trade spat. How quickly things have changed.

Xi's speech earlier exuded a calm and conciliatory demeanour, and that's enough for risk assets to take charge on the day.

In trading yesterday, the pair bounced off the year's lows at the 76.4/23.6 retracement level near 0.7652 - a level highlighted here as well. As mentioned then, it's a key support level that needs to be broken for a further downside move to materialise.

The failed break there sees the pair rebound to close higher on the day - owing part to dollar weakness as well. But the bounce here sees the pair close in on the 61.8 retracement level @ 0.7744.

Looking at momentum in the pair, especially after Xi's speech, that level won't hold up for too long as long as markets stay optimistic on the risk front. The next key resistance level to watch out for will be the 100-day MA and 200-day MA @ 0.7786 and 0.7812 respectively.

The former was a level the pair tried to break above in March but failed, so that will be the first key test to the pair in any upside move.