AUD/USD — Vulnerable To Further Downside

The bearish dynamics in the Aussie are at risk of extending further to the downside. This outlook is predicated on an array of convergences when analyzing the pressures emanating from correlated instruments. The roll-over in global equities, with the S&P 500 acting as a bellwether (in orange) is a red flag, which adds to the ongoing upward momentum in the USD index/weaker CNH (in red). Ideally, we should see the 5DMA off the orange line sloping down in the next 24h. The carving out of a top in the Aus vs US 5-year bond yield spread adds evidence that capital flows should not act as a catalyst to strengthen the AUD either. The slow stochastic is also coming out of overbought territory, which essentially suggests that the downward moving motion is the prevalent rhythm in the market at this stage. It’s also interesting to spot how the Point of Control in the last 24h was left out above the closing of the price at NY. Talking about closes, the fact that the bar ended NY trading at the very lows of the day should be another worry for bulls.