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  • AUD/USD is stuck between the 50 and 100-day omving averages, having rallied in the previous two trading days.  
  • The two-year US-AU yield differential continues to slide in the AUD-positive manner.  
  • A break above the 100-day MA hurdle may remain elusive if the equities trade in the red.  

AUD/USD is currently trading between the 50- and 100-day moving averages at 0.7124 and 0.7158, respectively, with the yield differentials favoring an upide break of the 100-day MA resistance.  

The spread between the two year US and Australian government bond yields has dropped by 20 basis points in the last six days and could slide even further on fears the Fed may cut rates next year to counter recession, as signaled by the recent curve inversion.  

Hence, AUD/USD may extend its two-day winning streak wih a move above the 100-day MA hurdle at 0.7158. As of writing, the pair is flat lined at 0.7124.  

While the developments in the bond market are AUD-bullish, a break above the 100-day MA could remain elusive if the markets remain risk averse. At press time, the S&P 500 futures are trading flat-to-negative, having ended with marginal losses yesterday. The major Asian indices like Nikkei, Kospi and Australia’s S&P/ASX 200 are reporting moderate losses at press time.  

Technical Levels