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Bears Gain Traction as AUDCAD Retreats from Extreme Ascending Channel Ceiling
Economic
Central Bank
Summary:
This area is critically important, as it coincides with the upper boundary of a well-defined ascending channel that has guided the pair’s recent climb.
Sell
TradingAUDCAD
EXP
0.96447
Entry Price
0.95300
TP
0.97700
SL
0.96270 -0.00195 -0.20%
0
Point
Flat
0.95300
TP
CLOSING
0.96447
Entry Price
0.97700
SL
The Canadian labor market delivered a nuanced narrative last Friday as Statistics Canada reported an unexpected contraction, with the economy shedding 24,800 jobs in January. However, a granular analysis of the data reveals that these losses were entirely localized within part-time positions, suggesting a compositional shift in the workforce rather than a systemic economic breakdown. Paradoxically, the national unemployment rate improved to 6.5%, marking its lowest level since September 2024 and significantly outperforming the market consensus of 6.8%.
This underlying resilience in the unemployment figures has effectively mitigated the downside risks surrounding Canada’s growth trajectory. Consequently, market participants have recalibrated their expectations, cooling the anticipation for aggressive monetary easing from the Bank of Canada (BoC). By neutralizing the immediate pressure for a aggressive dovish pivot, the labor report has established a stable fundamental floor for the Canadian Dollar (CAD).
In the Pacific, the Reserve Bank of Australia (RBA) synchronized its recent policy move with market expectations by raising the official cash rate by 25 basis points to 3.85% on February 3. Alongside this tightening, the central bank revised its short-term economic projections upward; growth and inflation are now forecasted at 2.1% and 4.2%, respectively, by June 2026. These hawkish revisions are predicated on the assumption that the cash rate may need to reach 4.2% by year-end to achieve price stability.
Despite this proactive stance, Australian consumer sentiment continues to exhibit signs of fragility. The Westpac-Melbourne Institute Sentiment Index retreated for the third consecutive month, underscoring the mounting pressure that elevated interest rates are exerting on household discretionary spending. This trend provides a compelling argument for a potential pause in the RBA’s tightening cycle during the upcoming March session.
Furthermore, the latest NAB Business Survey offered conflicting signals; while business confidence edged slightly higher to +3, overall business conditions moderated to +7. Notably, while capacity utilization remains 1.5 percentage points above its long-term average at 82.9%, it is crucial to recognize that this survey was conducted prior to the most recent rate hike, meaning its full impact has yet to be realized in the data.
Technical Analysis
From a technical perspective, AUD/CAD has pivoted lower after encountering significant supply at the 0.9700 psychological resistance level. This area is critically important, as it coincides with the upper boundary of a well-defined ascending channel that has guided the pair’s recent climb.
This rejection at the channel ceiling could catalyze a deeper corrective move toward the 0.9527 support zone. This target area is reinforced by the 100 and 200-period Moving Averages (MAs) on the 4-hour (H4) chart, currently positioned at 0.9526 and 0.9392, respectively. These averages are expected to provide significant dynamic support upon a retest.
Momentum oscillators are increasingly favoring the bearish thesis. The Relative Strength Index (RSI) recently peaked at 73, entering extreme overbought territory and signaling that bullish exhaustion has set in. Simultaneously, the MACD has executed a bearish crossover, with the histogram transitioning into negative territory.
The presence of a clear bearish divergence on the MACD—where price made a higher high while the oscillator made a lower high—further validates the potential for a sustained retracement.
As long as the price remains capped below the 0.9700 handle, sell-side positions are favored. However, a decisive break and close below the current support level would likely accelerate the correction. Conversely, an unexpected surge above the channel resistance would invalidate this bearish setup.
Trading Recommendations
Trading direction: Sell
Entry price: 0.9647
Target price: 0.9530
Stop loss: 0.9770
Validity: Feb 24, 2026 15:00:00
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