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Bearish Correction in Focus After Rejection at Local Resistance
Central Bank
Economic
Summary:
The signal lines remain only slightly above the neutral area, indicating that a further decline in price could trigger a bearish crossover.
Sell
TradingAUDCAD
EXP
0.99227
Entry Price
0.98050
TP
0.99850
SL
0.99173 -0.00019 -0.02%
0
Point
Flat
0.98050
TP
CLOSING
0.99227
Entry Price
0.99850
SL
In its Financial Stability Review (FSR) released on Thursday, the Reserve Bank of Australia (RBA) stated that “households and businesses are well positioned to manage a slowdown in economic activity and lower housing prices,” highlighting the resilience of domestic balance sheets despite a more challenging economic environment.
Australia’s trade surplus narrowed sharply to AUD 495 million in August from AUD 1.351 billion in the previous month, according to the latest external trade data published by the Australian Bureau of Statistics. The prior reading was also revised lower from AUD 1.923 billion, reflecting softer trade performance during the period.
Expectations for a Reserve Bank of Australia rate increase in November declined significantly after the latest Consumer Price Index (CPI) report came in broadly in line with market forecasts. Money markets now expect the Australian central bank to leave interest rates unchanged at its November policy meeting. According to LSEG data, the probability of a rate hike has fallen to around 20%.
Bank of Canada Governor Tiff Macklem recently stated that inflation is expected to “rise slightly over the coming months” and noted that what he described as a “new era of uncertainty” is unlikely to disappear anytime soon during remarks delivered in Halifax.
Regarding monetary policy, Macklem explained that the current discussion centers on whether policymakers should maintain interest rates at current levels or move them higher. He also warned that if the Bank of Canada tightens policy too gradually, it could eventually be forced to implement a larger amount of tightening than would have been required had action been taken sooner.
The Bank of Canada left its benchmark interest rate unchanged at 2.25% during its September policy meeting, a decision that was widely anticipated by financial markets. Nevertheless, policymakers acknowledged that inflation risks have increased, while newly introduced tariffs have added another layer of uncertainty to the economic outlook. Market participants currently assign nearly a 60% probability to a rate increase at the Bank of Canada’s next policy meeting scheduled for October 28.
Technical Analysis
AUDCAD remains within a corrective bullish move that recently reached the resistance level at 0.9945. The pair briefly moved above this barrier before falling back below it, creating a lower high in the process. This price action suggests that bearish momentum may be starting to regain strength, increasing the possibility of a decline toward the support level located at 0.9802.
From a trend perspective, the pair has recently closed below both the 100-period and 200-period moving averages, which are almost perfectly aligned at 0.9931 and 0.9932 respectively. The loss of these technical levels adds weight to the bearish outlook and could contribute to an acceleration of downside momentum if sellers remain in control.
In the oscillator area, the RSI recently approached overbought territory near the 65 level before rejecting lower. The indicator has now retreated to around 51 and is approaching a move into bearish territory, suggesting that bullish momentum continues to fade. Meanwhile, the MACD still displays a bullish histogram, although it has lost most of its depth and continues to weaken. The signal lines remain only slightly above the neutral area, indicating that a further decline in price could trigger a bearish crossover. Such a move, combined with a shift in the histogram, would provide additional confirmation that downside momentum is building and could support a broader corrective move lower.
Trading Recommendations
Trading direction: Sell
Entry price: 0.9921
Target price: 0.9805
Stop loss: 0.9985
Validity: Oct 16, 2026 15:00:00
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