AUD/USD: Perfect Bearish Storm

The Aussie is caught in a negate loop that is hard to ignore. By running a correlation coefficient we can understand that the market is currently driven by 2 main factors: 1- Aussie vs US bond yield differentials, which keep falling further as the market prices in an eventual RBA rate cut. 2- The ample demand for US Dollars even as the Fed mulls the possibility of an end to QT (no better alternatives). Technically, we can draw a descending trendline to help us to visually understand the type of order flow behind the market. For now, it does look quite regular and non-volatile, with impulsive sell-offs countered by corrective pullbacks. These are clear dynamics for a trend continuation, with the correlated instruments (DXY, Aus-US yield spread) alienated to see follow-through. The area marked in a green rectangle is where one may expect the next pocket of demand should 0.7065 give in.