Local Resistance Continues to Limit Upside Potential

Summary:

The Relative Strength Index (RSI) is currently positioned at 46, slightly within bearish territory and still leaving sufficient room for an extended corrective move to the downside.

Sell AUDCAD

EXP

Trading

0.99214

ENTRY

0.98250

TGT

0.99900

0.99449 +0.00340 +0.34%

Point

Flat

0.98250

TGT

CLOSING

0.99214

ENTRY

0.99900

In Australia, Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter stated on Tuesday that the housing market remains one of the primary transmission channels through which monetary policy affects the broader economy. Hunter added that policymakers continue to seek a moderation in both housing activity and overall economic growth as part of the central bank’s efforts to ease inflationary pressures.

Australia’s Trimmed Mean CPI remained unchanged at 3.6% year-over-year in July, exceeding the RBA’s year-end forecast of 3.3%. At the same time, real GDP growth reached 2.1% year-over-year during the second quarter, outperforming the central bank’s estimate of 1.9%. Together, these figures continue to reinforce expectations that the RBA could deliver a 25-basis-point rate increase to 4.60% at its September 29 meeting, a scenario currently assigned a probability of around 70% by financial markets.

Data released by the Australian Bureau of Statistics (ABS) showed that the economy expanded by 0.4% quarter-over-quarter in the second quarter, slightly above market expectations. The stronger-than-expected result further supports the argument for an additional rate increase in the near future.

Following the GDP report, market participants increased their expectations for a September rate hike, with the implied probability rising to nearly 70%, compared with approximately 50% before the data release.

In Canada, annual inflation remained unchanged at 3.0% in August, keeping price pressures above the Bank of Canada’s 2% target. However, the report did not provide clear evidence of a broad-based acceleration in inflation that would require an immediate monetary policy response. Economists noted that relatively stable energy prices and moderation in food costs helped contain inflationary pressures, while services inflation continues to be an area closely monitored by policymakers.

The August inflation reading leaves the Bank of Canada facing a challenging balance between persistent headline inflation, higher oil prices, and the risk that U.S. tariffs could weigh on economic growth in the coming quarters.

Previously, the Bank of Canada (BoC) left its benchmark interest rate unchanged at 2.25%, a decision that was widely expected by markets. Nevertheless, the central bank adopted a more cautious tone, highlighting that inflation risks have shifted to the upside and that evaluating the pace of the economic recovery has become increasingly complex.

BoC Governor Tiff Macklem stated that multiple rate increases could become necessary if inflation remains persistently elevated. At the same time, he emphasized that future policy decisions will depend entirely on how inflation trends and associated risks evolve. Supporting that view, Senior Deputy Governor Carolyn Rogers noted that monetary policy cannot respond to a single economic release or isolated risk, but must instead be guided by a broader assessment of economic conditions. Local Resistance Continues to Limit Upside Potential_1

Local Resistance Continues to Limit Upside Potential_1

Technical Analysis

AUDCAD has encountered strong resistance around the 0.9977 level, an area that has repeatedly attracted selling pressure and where price has struggled to establish a sustained breakout. Given the repeated rejection from this zone, a bearish correction appears increasingly possible, particularly as the pair moves away from resistance and toward the ascending trendline that continues to support the broader structure.

Near that trendline, local support is currently located around 0.9822, making it a reasonable downside objective should the corrective move continue. If sellers manage to push the pair below this support level, downside pressure could increase further and open the door to a deeper decline. Meanwhile, the 100-period and 200-period moving averages are positioned at 0.9936 and 0.9889 respectively. Importantly, price has already managed to close below the 100-period moving average, suggesting that bearish momentum could continue to develop from current levels.

Looking at momentum indicators, the Relative Strength Index (RSI) is currently positioned at 46, slightly within bearish territory and still leaving sufficient room for an extended corrective move to the downside. The indicator is not yet near oversold conditions, suggesting that sellers could maintain control without immediately facing exhaustion signals.

At the same time, the MACD continues to display a bearish histogram, although it currently lacks significant depth. The signal lines have already crossed into bearish territory, but the move remains relatively shallow for now. Should the downward move continue, the histogram could begin to gain additional depth while the signal lines move further into negative territory. From a technical perspective, such a development would reinforce bearish momentum and provide additional support for the downside scenario.

Trading Recommendations

Trading direction: Sell

Entry price: 0.9921

Target price: 0.9825

Stop loss: 0.9990

Validity: Sep 25, 2026 15:00:00

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