The AUDCAD currency pair started the week by hitting 1.5-year lows before rebounding. While Wednesday's upward momentum appeared strong, bulls significantly reduced activity yesterday. They failed to sustain above the 38.2% Fibonacci level (0.87), allowing bears to regain control. This inability to continue the rally may trigger a pullback toward the 0.86 level.
Recent actions by Donald Trump have significantly impacted both the Australian dollar and Canadian currency. However, analysts note Australia appears more vulnerable in this scenario. While the U.S. president paused tariff implementation for most nations, China now faces over 100% duties that continue rising almost daily. Given Australia's heavy reliance on Chinese exports, its economy remains more exposed than Canada's.
This divergence is clearly reflected in monetary policy forecasts for both countries' central banks. Market participants now anticipate at least 5 rate cuts from the Reserve Bank of Australia (RBA) by year-end, including a potential 0.5% move in May. Meanwhile, the Bank of Canada, which began its easing cycle earlier, is projected to deliver just two more reductions, as its current 2.75% rate already represents accommodative policy.
Recent economic data further highlights Australia's growing need for economic support. According to Westpac Banking's survey, the April consumer confidence index dropped 6% to 90.1 points, marking a six-month low. Business surveys reveal similar trends: while Canadian firms have spent months preparing for US trade challenges, Australian businesses were caught off guard by recent developments.
The RSI and Stochastic oscillators on AUDCAD daily chart have exited oversold territory, removing downward pressure. Sellers now likely target the level of 0.86.
Consider the following trading strategy:
Sell AUDCAD near the level of 0.87. Take profit – 0.86. Stop loss – 0.879.
This content is for informational purposes only and is not intended to be investing advice.
