AUD/CAD Uptrend Faces a Short-Term Resistance Test
Market Overview
The Australian and New Zealand dollars posted modest gains on Monday following remarks from US President Donald Trump, who refrained from dismissing the possibility of a recession driven by trade policy. Meanwhile, the Canadian dollar remains stable after oil prices experienced a sharp decline last week, limiting further volatility.
Despite these mixed macroeconomic influences, AUD/CAD is attempting to resume its three-month uptrend, showing renewed bullish momentum in early European trading hours. The pair’s upside bias reflects a combination of risk-on sentiment and Australia’s relative resilience amid global economic uncertainties.
Technical Analysis
The AUD/CAD pair has successfully broken above the range ceiling at 0.90736, marking a shift in momentum that has brought it to the first key resistance at 0.90792. While momentum oscillators, including RSI and MACD, signal increasing buying pressure, traders are closely watching whether the pair can sustain its upward trajectory.
A confirmed breakout above 0.90792 could pave the way for further gains towards 0.90863 and 0.90942. If bullish momentum persists, buyers may ultimately push the price towards the three-month high near 0.91069, a key technical level where profit-taking or trend exhaustion could emerge.
Conversely, if the pair fails to hold above 0.90736, a short-term retracement may follow. A break below 0.90657 would increase the likelihood of a deeper pullback, with sellers targeting the next support at 0.90530 as a key downside level.
Key Technical Levels
- Resistance 1: 0.90792
- Resistance 2: 0.90863
- Resistance 3: 0.90942
- Resistance 4: 0.91069
- Support 1: 0.90736
- Support 2: 0.90657
- Support 3: 0.90530
Fundamental Drivers
Investors are awaiting key economic data releases that could influence market sentiment. In Australia, the Westpac Consumer Sentiment Index is due for release on Tuesday, providing insights into the economic pressures affecting household confidence and spending. Additionally, the NAB Business Confidence Index, scheduled for later in the Asian trading session, will be closely monitored as a leading indicator of business outlook and potential economic expansion.
The Canadian dollar, which remains highly sensitive to oil price movements, may experience renewed volatility if energy markets continue to show weakness. Given that crude oil recently posted sharp losses, any additional downward movement could weigh on CAD sentiment, potentially benefiting AUD/CAD in the near term.
Conclusion
AUD/CAD is currently testing key resistance at 0.90792, with bullish momentum targeting further gains if buyers maintain control. However, failure to break higher could trigger a short-term retracement towards key support levels.
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