US tariff policy disparities drive AUDCAD lower

The AUDCAD currency pair continues to be in a downtrend. Following the announcement of sweeping US tariffs by President Donald Trump on April 3rd, the exchange rate declined to 0.89178. On Friday morning, the market experienced significant volatility of 1.49%, with the pair settling at 0.87952 at the time of this analysis.

The primary driver of this movement was the impact of new US tariffs. Canada unexpectedly avoided the duties, strengthening the CAD, while Australia was hit with a 10% tariff, negatively impacting the AUD. This divergence in trade policy of the United States increased pressure on the AUDCAD pair as traders assessed the economic consequences.

Despite avoiding new tariffs, the Canadian economy is facing headwinds. February saw exports fall by 5.5% and imports grow by only 0.8%, resulting in the first trade deficit in several months.

Australia’s economy is also showing signs of slowing. Household spending rose a modest 0.2% in February, below expectations, even after the Reserve Bank of Australia cut interest rates for the first time in four years. While annual consumer spending growth reached 3.3%, it remains insufficient to support robust economic growth. The 10% US tariff continues to weigh on Australia's export-oriented sectors, potentially limiting the RBA's ability to lower rates further without risking currency depreciation.

On April 4th, the RSI registered at 21, indicating downward momentum and approaching oversold territory, suggesting a potential short-term correction.

The MACD indicator also confirms the presence of sellers in the market. The MACD line has entered the negative zone, and the gap between it and the signal line is widening. This indicates a strengthening bearish impulse and the formation of a downtrend in the market.

Current recommendation:

Sell at the current price. Take profit – 0.869. Stop loss – 0.888.