- Spread between 10-year UST and AGB shrinks off-late, currently around 0.027%.
- AUD/USD battles an ascending trend line from June 15 after failing to bounce off 100-day SMA.
With the recently receding rate differentials between the 10-year government bond yields of Australia and the US, AUD/USD bears are attacking a four-month-old support line, while declines to 0.7050, during the early Asian trading on Tuesday.
Although the pair’s latest weakness could be attributed to its failures in crossing the 100-day SMA level of 0.7100, Kyle Rodda from the IG cites the diminishing difference between the 10-year Treasury yields of the US Treasury (UST) and the Australian Government Bonds (AGB) to weigh on the AUD/USD prices.
Currently, the 10-year US Treasury yields seesaw around 0.77% whereas its Aussie counterpart stays depressed near 0.750%.
With the bearish MACD joining the aforementioned downbeat catalysts, AUD/USD is likely to revisit the September month’s low of 0.7004 on the sustained downside below the said support line, at 0.7054 now.
Meanwhile, buyers are less likely to enter unless the pair successfully crosses the 100-day SMA level of 0.7101, which in turn will eye a falling trend line from the September 01, currently around 0.7200.
Traders await RBA minutes for fresh impulse while keeping the bearish bias.
Read: When are the RBA minutes and how might they affect AUD/USD?
AUD/USD daily chart
Trend: Bearish
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