- Aus-US yield differential weighing down on the Aussie, with persistent USD buying.
- Bears eye a break below 0.7700 on an extension of the corrective slide.
The AUD/USD pair extended its corrective slide from five-week tops (0.7813) into Asia, as the bears remain in complete control amid mixed markets while markets are poised for a meaningful downside correction after the recent strength.
The Aussie looks vulnerable below a break of the 0.7700 support area, as narrowing yield spread between the Aus/ US 10-year yields offers support to the greenback at the expense of the Aussie dollar, especially after the 10-year Treasury yields surpassed the 3% key levels and 2-year Treasury yields hit the highest since September 2008.
Moreover, stalled buying seen across the metals space combined with heavy declines seen in the NZD/USD pair also collaborates to the downbeat tone around the major. Looking ahead, there is nothing of note, in terms of economic news, and hence, the broader market sentiment and USD dynamics will continue to influence the pair.
AUD/USD levels to watch
“The key-day reversal suggest further downside pressure and if we take out the session low, then look for a run back to 0.7705/0.7690 (10 April low – 0.7693). Under there, the Aud has previously found a medium-term base in the 0.7640/50 range (9 April low – 0.7651) and this needs to be taken out in order to allow further downside progress towards the next major level, at 100 WMA (0.7625). Below this would then move towards the major rising trend support from January 2016, at 0.7590, although that may take a while.”