Over the past week, AUDCAD has traded within a downtrend due to a stronger Canadian dollar, supported by a positive fundamental environment. What was the trigger? A new round of clashes between the United States and Iran pushed oil prices higher, creating favorable conditions for the loonie. In just seven days, Brent and WTI crude have gained over 10%. As a major energy exporter, Canada is thriving under these circumstances, benefiting from elevated commodity revenues and a robust national currency.
The central bank’s decision to hold interest rates at 2.25% for the sixth consecutive meeting acted as another tailwind for the loonie. The outlook is improving: the regulator underlined signs of economic recovery and easing inflation. The country’s GDP is expected to rise if everything goes as it is supposed to. Nevertheless, the Bank of Canada (BoC) is clearly in no rush to cut borrowing costs. Officials have merely softened their tone and stopped talking about future hikes. This has kept the loonie afloat, helping it climb to a four-week high and confirming the market’s positive reaction.
Across the Pacific, things are far less stable. The Reserve Bank of Australia (RBA) kept rates at 4.35% at its latest meeting. Policymakers do not rule out further tightening if inflation risks persist. This, of course, underpins the national currency and limits its decline. However, the external landscape is deteriorating. One of Australia’s largest trading partners, China, posted a slowdown in second‑quarter GDP growth to 4.3% year‑over‑year. This disappointing figure raise questions about future demand for Australian goods and weighs on the Aussie.
The technical setup shows that bears remain firmly in the driver’s seat. The Relative Strength Index (RSI) sits below the 50 threshold and continues to sink. At the same time, the Moving Average Convergence / Divergence (MACD) Indicator has just dropped into negative territory, forming a clear selling signal. The 0.97500 support level could be the pair’s next downside target.
The final recommendation:
— Sell AUDCAD at the current price, aiming for 0.97500 within a month.
— Place a Stop Loss order at 0.99000 to mitigate the risk if the market moves against us.
This content is for informational purposes only and is not intended to be investing advice.
