AUD/USD eyes completion of Head & Shoulders as RBA rate hike odds drop on weak inflation

The AUD/USD pair is fast losing altitude, now trading at 0.7725 levels; down 0.66 percent on the day as traders pare back RBA tightening expectations following the soft Q3 inflation release.

The currency pair looks set to extend losses to the head and shoulders neckline support of 0.7705.

RBA unlikely to hike rates before Nov 2018

As per Reuters report, " Interbank interest-rate futures <0#YIB:> eased as investors further pushed out the likely timing of any hike. A rise in rates is now not fully priced in until November next year."

The drop in the rate hike odds, pushed the 10-year Aussie-US government bond yield spread (difference) to a 11-week low of 36 basis points.

AUD/USD Technical Levels

The immediate support is seen at 0.7705 (head and shoulders neckline) and 0.7692 (200-DMA). An end of the day close below the 200-DMA would expose support at 0.7616 (trend line sloping higher from May low and June low).

As per the measured height method, head and shoulders breakdown would open up downside towards 0.7285 levels.

On the higher side, breach of resistance at 0.7747 (Oct 9 low) could yield a re-test of 0.7785 (Oct 3 low) and 0.78 (zero levels).