AUD/CAD Buyers Push for Breakthrough Above One-Year High Amid Market Volatility
Thursday Market Overview:
The Australian dollar has surged to a new 33-year high against the yen due to strong demand from overnight carry trade transactions, where traders borrow in lower-yielding currencies to invest in higher-yielding ones. Despite Australia’s lower-than-expected trade balance due to weak exports, the AUD remains strong, buoyed by the falling US dollar amid cooling labor market data. On the other hand, oil prices declined on Thursday, driven by fears of weak global demand despite reduced US inventories indicating strong seasonal fuel demand. This decline in oil prices has impacted the Canadian dollar, which is sensitive to commodity price movements. Overall, Asian currencies, including the AUD, stabilized on Thursday as markets anticipated potential rate cuts from the Federal Reserve.
Technical Analysis:
On the daily chart, the AUD/CAD pair has maintained an uptrend over the past month, trading above its 50-day moving average and nearing its one-year high. The price has tested the resistance level of 0.91571 more than four times. The increasing bullish momentum, supported by the divergence between the 200-day and 50-day moving averages and bullish oscillator signals, indicates that buyers are determined to breach this critical level. If successful, the immediate target will be 0.91840, with further bullish momentum potentially driving the price towards the resistance zones at 0.92245 and 0.92561.
Alternative Scenario:
If buyers fail to break through the 0.91571 resistance level, sellers might push the price down towards the support at 0.91193, near the 50-day moving average. Only a sustained break below the 0.90581 support level would signal a potential trend reversal to bearish.
Market Overview and Key Levels
Resistance Levels:
- Resistance 3: 0.92561
- Resistance 2: 0.92245
- Resistance 1: 0.91840
Current Price (at the time of analysis): 0.91536
Support Levels:
- Support 1: 0.91193
- Support 2: 0.90581
Impactful Events:
Key economic reports influencing this currency pair include the Ivey PMI and the unemployment rate report in Canada, both due on Friday. Expectations are for growth in both indicators. An increase in the unemployment rate could weaken the Canadian dollar, while an improvement in the Ivey PMI could support its stability.
Oscillators and Risk Warnings:
RSI (Relative Strength Index): Bullish, indicating strong buying momentum.
MACD (Moving Average Convergence Divergence): Bullish, supporting the upward trend.
Moving Averages: Bullish, reflecting the current positive price action.
Conclusion:
The AUD/CAD pair is currently in a strong uptrend, approaching a critical one-year high resistance level. A successful break above 0.91571 could lead to further gains.
However, failure to breach this level could result in a retracement towards the supports at 0.91193 and 0.90581. The pair’s direction will also be influenced by key Canadian economic reports due on Friday, which could affect the Canadian dollar’s strength. Investors should remain vigilant to these fundamental indicators and key technical levels to navigate the market effectively.
Find us on
