AUDCAD set to bounce off support as Canadian dollar faces fundamental pressure

After its recent bullish move, the AUDCAD pair is seeing a corrective pullback. Prices are currently testing significant dynamic support. This positioning suggests the potential for a renewed upward reversal. The 0.90928 EMA (20) level is where trading is actively occurring, which points to an ongoing battle between buyers and sellers for market dominance.

The Stochastic Oscillator readings (%K=26, %D=42) back up this view by indicating neutral to bearish conditions approaching oversold territory. Historically, such levels have preceded market reversals, particularly when the %K line turns upward and crosses above the %D one, generating a classic buy signal.

The Chaikin Oscillator has steadily dropped since its sharp peak on September 11, further supporting the idea of weakening bearish momentum. This trend suggests a reduction in selling pressure and a potential end to the downward move. Although the oscillator remains in negative territory, its slower descent, combined with the price nearing a key support zone, creates favorable conditions for a shift in market sentiment.

The EMA (20) at 0.90928 remains the key threshold for confirming bullish strength. Trading above this moving average for an extended period will signal a resumption of the broader uptrend. Conversely, hovering below this level could extend the ongoing correction toward the 0.9070 support zone.

From a fundamental perspective, the loonie's short-term softness offers a supportive environment for AUDCAD. The Bank of Canada's recent decision to lower interest rates and its openness to further monetary easing stands in contrast to the Reserve Bank of Australia's (RBA) more cautious and steady approach. This divergence enhances the Aussie's appeal as a higher-yielding currency. Meanwhile, the Canadian dollar is under mounting pressure due to the sluggish state of oil markets, a critical source of support that is waning.

Given this backdrop, the most likely scenario for the pair is a technical rebound to test the resistance zone from current levels.

Consider the trading strategy down below:

Buy AUDCAD at the current level (0.91106). Take profit: 0.91850. Stop loss: 0.9070.

This forecast is valid from September 19 to September 26, 2025.