The state-of-the-art interpretation of stem radius changes (DRTotal) for tree water relations is based on knowledge from mostly slow growing tree species. The ratio between diurnal size fluctuations of the rigid xylem (DRXylem) and the respective fluctuations of the elastic bark (DRBark) is known to be small (<0.4) and is of importance for the localisation of water storage dynamics in stems. In this study, fast growing Eucalyptus globulus Labill. in Tasmania were investigated by point dendrometers in order to investigate tree water relations. Unexpectedly, DRXylem was found to be the main driver of DRTotal with the bark acting as a passive layer on top of the fluctuating xylem under most conditions. Accordingly, the ratio between the diurnal fluctuations of the two tissues was found to be much higher (0.6-1.6) than everything reported before. Based on simulations using a hydraulic plant model, the high tissue-specific elasticity of the Eucalyptus xylem was found to explain this atypical response and not osmotically-driven processes or species-specific flow resistances. The wide zone of secondary thickening xylem in various stages of lignification is proposed to be an important component of the high wood elasticity. The tissue acts as additional water storage like the bark and may positively affect the water transport efficiency.