The positive risk backdrop so far is the key driving force but the RBA's message earlier isn't doing any harm.

Commodity currencies are sitting higher for the most part but the aussie stands out with AUD/USD keeping a bounce off the 0.7000 level after threatening a fall at the end of last week.

AUDUSD D1 07-12

I've not been a fan of the aussie ever since the RBA fell behind the tightening curve. So, this to me has a technical retracement written all over it - rather than a major turn in sentiment.

With the Fed and RBA on diverging paths, it is tough to imagine a significant and sustained rebound in the pair. That said, after a push from 0.7500 to 0.7000, perhaps there is some scope for a decent retracement.

Holding above 0.7000 is encouraging for buyers, so that remains the key line in the sand for AUD/USD downside.

Looking over to the near-term chart:

AUDUSD H1 07-12

Buyers have seized back some near-term control in a push above the 100-hour moving average (red line). But the bias remains more neutral, as price keeps below the 200-hour moving average (blue line).

Adding to that, there is some minor resistance from the 23.6 retracement level @ 0.7125.

Those will be key upside targets that buyers have to work through to establish more momentum in the sessions ahead.

While the bounce yesterday and today is encouraging, there is more work to be done to really convince of any potential upside turnaround in AUD/USD moving forward.

Not only that, a lot of the momentum will be dependent on how things develop with omicron.

The aussie may be looking optimistic now but don't discount that any gains so far this week may be fleeting if we get bad news on the omicron front in the days/weeks ahead.