The Australian dollar has dived to a fresh six year low and could soon be worth just 72 US cents.
The local currency sank more than one US cent overnight to a low of 73.55 US cents as the greenback rallied on a positive assessment of the US economy by the head of the US Federal Reserve.
The Australian dollar recovered some ground during the day and was back at 73.81 US cents at 1700 AEST.
CommSec chief economist Craig James said the US dollar strengthened against all major currencies after Federal Reserve Chair Janet Yellen's scheduled appearance before Congress.
In prepared testimony, Ms Yellen stuck to her forecast for an increase in the Fed's key interest rate later this year, and predicted a pick-up in the US economy.
Mr James expects the greenback to remain strong in the medium term, which will put further pressure on the Aussie.
"We're now looking at 72 US cents by the end of the year and 70 US cents by March and June of next year," he said.
Further falls would provide a boost to the local economy and encourage the Reserve Bank of Australia to leave the cash rate at an historic low of two per cent, Mr James said.
"It should improve the competitiveness of the Australian companies versus imports and on the export market," he said.
"It's just another reason why the Reserve Bank is more likely to be sitting on the interest rate sidelines for the remainder of the year."
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