The downside surprise to Australian Q4 GDP has deepened bear sentiment toward AUD/USD, with 3-month bank bill futures now pricing in the risk of an RBA rate cut in the third quarter of 2019.
AUD/USD set a new short-term low as Australian-U.S.
yield spreads sharply widened, but bears seem to need help in confirming a top is in place.
That confirmation could come from a break of the head and shoulders top neckline, which currently sits at 0.7024.
Technicals suggest that break is due as the pair now trades below the daily cloud and February's low while downside momentum from falling RSIs grows.
AUD/USD bears are likely waiting for Friday's U.S. jobs report to see if the slide will hit new depths.
Today's downside misses to U.S. December trade balance and February ADP have tarnished the greenback's appeal slightly, preventing AUD/USD from falling below the neckline.
Should Friday's NFP and wage data surprise to the upside, the U.S. rate complex is likely to rally as doubts about the Fed's patient stance will grow.
The greenback is likely to gain and AUD/USD should trade heavy.
A break of and close below the neckline confirms the top.
The confirmation suggests the 0.6800 area can trade.
chart: Click here