The AUDCAD pair is poised to close the week in the green due to the monetary divergence between the Australian and Canadian central banks. While the first raised interest rates to tame stubborn inflation, the second took a wait-and-see approach. As a result, the Aussie finds itself in a beneficial position. Even soaring crude prices, which typically provide strong support for the energy-linked loonie, have failed to offset the impact of the RBA–BoC policy gap.
On March 17, the Reserve Bank of Australia raised its key rate by 25 basis points to 4.10% for the second time in a row. The reason is obvious: the core Consumer Price Index (CPI) surged to a 16-month high in January, making the regulator really concerned about untamed inflation. The risk of further spikes is viable; therefore, the RBA is poised to be hawkish.
Across the globe, the Bank of Canada has another tactic. At the latest meeting, officials kept borrowing costs unchanged at 2.25%—a decision that came as no surprise to traders. With a sluggish labor market, subdued business investment, and a thick fog surrounding the country’s trade relationships with the United States, Canada’s economy is crying out for help. Despite these headwinds, the regulator is not giving up on tightening monetary policy, but most economists doubt this scenario. They believe that a rate cut is more likely in the second half of 2026.
The energy premium that has buoyed the loonie appears to be fading. Signs of progress in diplomatic efforts to de-escalate the Middle East conflict have emerged, and crude prices have started to go down since Thursday. US statements about injecting additional volume into the market were another reason for the decline.
From a technical standpoint, AUDCAD is slowly climbing to a local high of 0.97610. The Stochastic Indicator, sitting in the upper part of the range, confirms recent gains but hints at weakening momentum upon approaching the overbought zone. Meanwhile, the Chaikin Oscillator remains in positive territory—a sign that the upward impulse still has some legs.
Try out the following trading strategy:
Buy AUDCAD near 0.96950 during a correction. Place Take profit at 0.9800. Set Stop loss at 0.96300.
The forecast remains relevant between March 20 and March 27, 2026.
This content is for informational purposes only and is not intended to be investing advice.
