Saturday, March 17, 2018
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AUD/USD finds no love as yield spread turns negative
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  • AUD/USD remains depressed around 0.78.
  • The 10Y AU-US yield spread has turned negative.

The overnight sell-off in the AUD/USD seems to have stalled just below 0.78, however, buyers are in no mood to step in, given the 10-year AU-US yield spread has turned negative.

As of writing, the yield on the US 10-year treasury note is at 2.932 percent. Meanwhile, its Aussie counterpart is seen at 2.85 percent. The 10-year yield spread has tilted in favor of the greenback for the first time since 1998.

So, the greenback is now a high yielding currency and hence the USD/JPYcould replace the AUD/JPY cross as a barometer of risk sentiment.

Ahead in the day,  the Aussie will likely remain under pressure, courtesy of the negative yield spread and the risk-off tone in the markets. That said, a minor corrective rally cannot be ruled out, given the oversold nature of the 1-hour RSI and 4-hour RSI.

AUD/USD Technical Levels

The spot was last seen trading at 0.7795. A move above 0.7805 (session high) could yield a corrective rally to 0.7860 (5-day MA) and 0.7870 (10-day MA). On the downside, breach of support at 0.7774 (200-day MA) would shift attention to 0.7759 (Feb. 9 low) and 0.7744 (61.8% Fib R of Dec-Jan rally).

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