AUD/USD defends 100-day MA, but yield spreads favor USD

• AUD sellers ran out of steam around 100-day moving average (MA).
• 10Y AU-US yield spreads rise in the USD-positive manner.

The AUD/USD has recovered about 20 pips from the session low of 0.7770, ensuring the 100-day moving average support of 0.7775 remains intact.

However, the bond yield spreads favor the greenback. The AU-US 10-year yield spread fell to -12.6 basis points today - the lowest since March 5. Further, the two-year yield spread has dropped to a fresh 18-year low of -31.9 basis points.

So, the recovery from the session lows could be short-lived and the pair may soon take out the 100-day MA support in a convincing manner amid rising US-China trade tensions, jump in offshore USD funding costs (widening Libor-OIS spread).   

AUD/USD Technical Levels

A close below the 100-day MA of 0.7775 would open doors for a sell-off in 0.7712 (March 1 low) and 0.77 (psychological levels). On the higher side, a move above 0.7801 (200-day MA) could yield a rally to 0.7824 (ascending 10-day MA) and 0.7840 (5-day MA).