The resilience of the euro and the Australian dollar has stumped analysts, with one saying that currency markets are now living in an alternative world. The Australian dollar, also known as the Aussie, rose to $0.9158 on Tuesday, its highest level this year. It is closely tied to the health of China's economy and the fact that the rally has come amid signs of weakness in China, Australia's biggest trading partner, has taken analysts by surprise. (Read more: Aussie dollar resilience: Here today, gone tomorrow?)

Meanwhile, the has also proved resilient in the face of weak manufacturing activity data from China and a dip in European factory activity data on Monday. It gained more than 1 percent against the dollar on Monday and was trading at around $1.3829 on Tuesday. "We're living in one those alternate worlds at the moment here in foreign exchange land," Robert Rennie, global head of FX strategy at Westpac bank, told CNBC.

Australian Currency. Carolyn Hebbard | Flickr | Getty Images

Rennie said the Aussie's jump upwards on Monday was "bizarre" in his view given China's bleak manufacturing data, but added that the move may reflect investors starting to view China data and its relation to the Aussie differently. China's manufacturing activity contracted for a third straight month in March, a Markit/HSBC survey showed on Monday. "In the world we live in at the moment bad news out of China is actually good for the Aussie because it suggests the possibility of a triple-R cut or indeed further fiscal stimulus increases," he said, referring to a possible cut in the reserve requirement ratio - the amount of cash local banks must keep in reserve. (Read more: Don't buy therecent Aussie dollar bullishness)

China's slowing economy has stoked chatter that Beijing is moving closer to unleashing monetary and potentially fiscal stimulus measures as soon as next quarter. Rennie said he was not confident this 'alternate world' was here to stay. "I'm not sure I'm confident in that story ... given weaker commodity prices...it's difficult to get too upbeat on the outlook for Aussie," he said.