AUDCAD drops due to rising stagflation risks in Australia

AUDCAD is currently trading near 0.98116, retreating from a local high of 0.98682. Positive developments in US-Iran peace talks have shifted market sentiment back toward riskier assets, pushing the pair into a correction after its relentless rally since March 30.

Crude prices were naturally the first to react to effective diplomatic efforts and a geopolitical thaw. Brent oil dipped below $100 per barrel on the news, as the so-called “war premium” lost its luster. The Canadian dollar, closely tied to energy costs, wasn’t thrilled by this shift, though a broader fundamental picture helped the currency stay afloat. At the same time, bets on a guaranteed rate hike by the national central bank in 2026 grew stronger.

The Aussie, however, may feel the sting more acutely. The NAB Business Confidence Index for March hit rock bottom, and April’s consumer sentiment fell to levels not seen since 2020. The Reserve Bank of Australia (RBA) has already increased borrowing costs twice this year and is determined to make the same move in May. Still, the economy feels every blow. The RBA Deputy Governor described the current predicament as a “nightmare” for the regulator, expressing his concerns about the chosen monetary path. The fire at the Geelong refinery is making things worse, threatening to wipe out the drop in domestic fuel prices.

From a technical standpoint, we see a corrective movement following the pair’s steady rally since late March. AUDCAD has just pulled back from the 0.98682 high, looking down for the second session in a row. On Friday morning, prices hovered around 0.98116. The Chaikin Oscillator confirmed the reversal by sliding lower on weaker buying momentum, reflecting sluggish accumulation at current peaks. The Average Directional Index (ADX) is now sitting near the 23–25 range, suggesting that, while buying pressure remains, the momentum is running on fumes. Of course, the market could still make a bold move to offset recent losses and close the day in positive territory.

Consider the trading strategy down below:

Sell AUDCAD during a rebound to 0.98500. Place Take profit at 0.97450 and Stop loss at 0.98820.

The forecast is valid from April 17 till April 24, 2026.