AUD/CAD Drops Ahead of RBA Meeting

31/03/2025

Market Overview

AUD/CAD started the new trading week with a significant bearish gap, following a period of range-bound and low-volatility trading. Meanwhile, the Canadian Dollar found support from rising oil prices, which bolstered its appeal against the Aussie. However, global trade concerns remain in the spotlight as the United States prepares to implement tariffs on several trading partners, including Canada, Mexico, Europe, and China. These developments are likely to influence both currencies in the coming sessions.

Technical Analysis

On the daily chart, AUD/CAD has shifted to a bearish outlook after breaking the key support level at 0.89716. The pair opened the week significantly lower, confirming downside momentum. If sellers manage to close the price below this critical level, the next immediate support at 0.89547 becomes viable. Further declines could see the pair testing 0.89332 and ultimately reaching 0.89094, which marks the lowest point of 2025.

Momentum indicators reflect bearish dominance. The RSI has dipped below 50, indicating negative sentiment, while the MACD histogram continues to extend below the zero line, confirming increased selling pressure. For a bullish recovery, buyers must reclaim the resistance at 0.90338, invalidating the current downtrend and signaling a potential reversal.

Key Technical Levels

Resistances: 0.89716, 0.89954, 0.90338
Supports: 0.89547, 0.89332, 0.89094

Fundamental Drivers

The key event for AUD/CAD is the RBA meeting on Tuesday. While no rate change is expected, the governor’s comments will be closely monitored for any guidance on monetary policy. Additionally, Australia’s monthly retail sales data, projected to increase by 0.3%, may impact short-term sentiment. In Canada, rising oil prices continue to support the Loonie, though upcoming US trade tariffs could curb its strength.