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AUD/USD - Trendline hurdle holds, AU-US yield differential narrows to 5-month low

  • AUD/USD upside capped by descending trendline hurdle.
  • 10Y AU-US yield differential continues to narrow in the AUD negative manner.

The three-day winning streak in the Aussie ran out of steam at the resistance offered by the trendline sloping lower from the Sep. 20 high and Oct. 20 high.

As of writing, the spot is trading largely unchanged on the day at 0.7620. The pair tested and failed to take out the trendline hurdle of 0.7632 earlier today.

The rejection at the key trendline hurdle could be associated with the narrowing of the 10-year AU-US yield spread to a 5-month low of 17.6 basis points. The narrowing yield differential is hurting the appeal of the Aussie dollar as a high yielding currency.

Yield differential 

AUD/USD Technical Outlook

Jim Langlands from FX Charts writes, "with the 4 hour/daily momentum indicators looking increasingly positive, a test of the H/S neckline formation at 0.7660 would not surprise, above which would find further sellers at the 13 Nov high of 0.7665. Beyond this would then allow a run towards 0.7675/80 and possibly 0.7695/0.7700."

"The downside will again find minor support at 0.7590/0.7600 and then at 0.7565 and 0.7550 ahead of the stronger 0.7530/35, area, which will continue to be strong, but below which would target Fibo support at around 0.7515. A break of this would then look towards 0.7485 and 0.7460/70 (Rising trend support) albeit this is some way off."

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