AUDCAD eyes 6-month high upon breaking 0.9 resistance

This week, the AUDCAD pair made another attempt to breach the significant 0.9 resistance. Unlike all failed attempts from May to August, the price stayed above the mentioned threshold for more than one trading session. This suggests the breakout is genuine and not false. A legitimate breach indicates that there is substantial room for the currency pair to spring up. The next target for buyers is setting a new 6-month high near 0.905. 

The daily chart reveals a clear uptrend originating from the July low. This trend is reinforced by the 100-day moving average, which reversed the prior negative movement in late August. The lower Bollinger Band also converges around these levels, adding to their technical significance. Momentum indicators, including the RSI, remain in neutral territory and present no immediate obstacle to the current buying wave.

Fundamentally, the Australian dollar draws strength from robust Q2 GDP data, which showed a 0.6% growth—surpassing forecasts and marking a 2-year high. Market expectations have subsequently shifted, with traders now fully ruling out a rate cut by the Reserve Bank of Australia (RBA) at its September 30 meeting and scaling back their outlooks for a reduction in November.

In contrast, the Canadian dollar found modest support from a slightly improved July trade balance. The deficit remains substantially wider than pre-US tariff levels. If today's critical August labor market data fails to show a sharp improvement, the Bank of Canada (BOC) may be compelled to end its 6-month pause and enact monetary easing on September 17. This potential divergence in regulatory policy—with the RBA on hold and the BOC potentially cutting—would widen the interest rate differential and provide additional fundamental support for a higher AUDCAD exchange rate.

Here's a trading strategy to consider:

Buy AUDCAD at or above 0.9. Take profit: 0.905. Stop loss: 0.895.