The Aussie dollar fell as deep as $0.9547 after investors went gunning for major stops at $0.9581 to last fetch $0.9570 at 0439 GMT, showing a loss of 0.5 percent on the day. "Sentiment has taken another blow with the AUD breaking its low last year. It is hard to conclude other than this is a major long term topping pattern," said Greg Gibbs, a strategist at Royal Bank of Scotland in Singapore. He forecast the Aussie between 85 and 90 cents in the long-term. Traders cited option barriers around $0.9550 with larger stops just below. A break would open the way to $0.9388, the weakest since October 2011. Not helping sentiment was a surprising drop of 2 percent in Australian construction work done versus forecasts of a rise of 1 percent. The weak reading only added to worries the Australian economy may rely too heavily on a recovery in the housing market to offset the end of a once-in-a-century mining investment boom. Markets have narrowed the odds of further easing by the Reserve Bank of Australia (RBA). They give a one-in-four chance of an interest rate cut to a record low of 2.5 percent on June 4 when the RBA holds its monthly policy meeting. Tracking sharp falls in US Treasuries prices on Tuesday, Australian bonds dropped, with 10-year cash yields jumping to two-month highs at 3.48 percent. But the short end outperformed as falling iron ore prices combined with concerns about China's economic growth kept alive expectations of further easing in Australia. The International Monetary Fund cut its growth forecast for China this year to 7.75 percent from 8 percent, adding to concerns that the world's second-largest economy is losing momentum. The three-year bond futures contract shed 0.06 points to 97.330, while the 10-year skidded 0.15 points to 96.520, the lowest since late March.

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