The Australian dollar topped 76 US cents on Monday, propelled to a seven-month high on the risk of an imminent interest rate rise, negative US dollar sentiment and a fresh quarter-century high for gold prices.
Economists polled by Reuters gave a median 40 percent chance of a 25 basis point rise in the cash rate to 5.75 percent after this week's central bank rate review.
One Aussie dollar bought $0.7609/12, up almost two cents since stronger-than-expected inflation data was released last Wednesday.
"Market expectations that the RBA will hike rates are a key factor pushing the Aussie higher. Higher commodity prices and a weakening in the US dollar are also behind the Aussie's rise," said Besa Deda, currency strategist at Commonwealth Bank.
The Reserve Bank of Australia's (RBA) policy decision will be announced on Wednesday, following the central bank's monthly board meeting on Tuesday. The cash rate has been unchanged at 5.5 percent since March 2005.
"If the RBA keeps the cash rate steady this week, the Aussie is likely to experience a pull back from current levels," Commonwealth's Deda said.
"However, markets are then likely to turn their attention to June as the timing for a rate hike ... underpinning the outlook for the Aussie dollar," she said.
The Aussie traded a $0.7573-$0.7622 range, extending its gains from Friday's offshore peak at $0.7606 after a surge of strength late in the session.
On the charts, a rally through $0.7610/20 could clear the way for a rapid rise back to $0.7700, levels last seen in September 2005, technical analysts said.
The Aussie was also buoyed by US dollar weakness after Federal Reserve Chairman Ben Bernanke said last week that the Fed may pause in its tightening campaign, although markets still expect a US interest rate rise on May 10.
The US dollar slid to a seven-month low against the yen and a one-year low versus the euro on Monday, also pressured by tension in the Middle East.
Gold, highly correlated to the Aussie, charged to a fresh quarter-century high at $661.10 an ounce and crude oil hovered around $72 a barrel on fears that key oil exporter Iran could face UN sanctions over its nuclear ambitions.
Australia is the world's second-biggest producer of bullion behind South Africa and is also a major exporter of base metals, so the local currency often takes a lead from metals prices.
But some analysts said upside influences on the Aussie - the risk of a 25 basis point rate rise and a bull run for commodities - were now largely priced into the currency.
"We would be cautious of levels above $0.7600/20," said Sue Trinh, senior currency strategist at RBC Capital Markets.
"This area represents very strong technical resistance, such that a 'no rate hike' decision leaves the Aussie exceptionally vulnerable short term to a sell-off back to $0.7390," she said.