The AUDCAD pair is moderately rising on Friday due to Australia's probable exclusion from the list of countries that will be subject to US trade tariffs. President Donald Trump said he was ready to consider tariff exemption for Australia's steel and aluminum exports after a phone call with Australian Prime Minister Anthony Albanese. This factor supports demand for the Australian dollar.
However, the Australian currency is still under pressure due to the expected interest rate cut by the Reserve Bank of Australia (RBA). According to the latest data, the country's consumer inflation forecast rose to 4.6% in February from 4.0% in January, reaching the highest level since April 2024. Nevertheless, the market sees a 95% chance that the RBA will ease monetary conditions down to 4.10% at the next meeting, as core inflation is slowing faster than projected.
The Canadian dollar is receiving support as the probability of a rate cut by the Bank of Canada in March has decreased. This limits the currency's weakening.
Globally, US trade policy continues to affect the currency market. On Thursday, Donald Trump signed a memorandum on reciprocal trade and tariffs for countries that levy duties on imports from the United States. These tariffs are additional to the 10% duties that are already in place, as well as the 25% tariffs on steel and aluminum. However, the US President decided to postpone the imposition of the 25% duties on Mexican and Canadian imports. These events increased market uncertainty, triggering a correction phase on cross rates.
From a technical perspective, the AUDCAD pair is in a downward correction after breaking out of December's downtrend on the H4 timeframe. The wave analysis indicates that the price is forming the second corrective wave. Divergence of Relative Strength Index (RSI) signals a possible reversal with the second wave transitioning into the third ascending one. The consolidation of the price above the 0.9065 level, which is the top of the first wave, will strengthen the upward movement.
Short-term prospects for AUDCAD suggest buying with the target of 0.9180. Part of the profit should be taken near the level of 0.9065. A Stop loss could be set at 0.8845.
Since the bullish trend is short-term, the trading volume should not exceed 2% of your total balance to reduce risks.
This content is for informational purposes only and is not intended to be investing advice.
