Base-Building Phase Near Completion, 1.0000 Remains the Medium-Term Target

Summary:

AUD/CAD has retreated toward the lower boundary of its two-month trading range, where price volatility has narrowed significantly, suggesting that the pair is entering a base-building phase. With the Reserve Bank of Australia maintaining a relatively hawkish stance while Canada's economic momentum continues to soften, the medium-term fundamental outlook increasingly favors the Australian dollar. As long as key support remains intact, the pair is expected to resume its upward trend after completing its consolidation, with the psychological 1.0000 level remaining the primary medium-term objective.

BUY AUDCAD

EXP

TRADING

0.97971

Entry Price

1.01000

0.95750

0.97951 -0.00275 -0.28%

0.0

Pips

Flat

0.95750

Exit Price

0.97971

Entry Price

1.01000

Fundamentals

AUD/CAD is currently trading around 0.9805, with market attention shifting back to the monetary policy outlook of both central banks and developments in commodity prices.

In Australia, although economic growth has moderated, inflation remains above the Reserve Bank of Australia's target range. As a result, the RBA is expected to maintain a relatively restrictive policy stance in the near term. Higher-for-longer interest rates should continue to support the Australian dollar, while improving global risk sentiment would further benefit commodity-linked currencies.

In Canada, stable energy prices continue to provide some support for the Canadian dollar. However, signs of slowing economic growth are becoming more evident, with consumer spending and the housing market still constrained by elevated borrowing costs. Consequently, market expectations for additional tightening by the Bank of Canada remain limited, restricting the upside potential for the loonie.

From a broader perspective, a gradual recovery in global manufacturing activity would benefit Australia's resource exports, whereas the Canadian economy remains more closely tied to crude oil prices. If oil prices enter a prolonged consolidation phase, the Canadian dollar's relative advantage may weaken, creating additional room for AUD/CAD to appreciate.

Overall, the fundamental balance is gradually shifting from favoring the Canadian dollar toward supporting the Australian dollar, providing a solid foundation for further medium-term recovery.

Base-Building Phase Near Completion, 1.0000 Remains the Medium-Term Target_1

Technical Analysis

On the daily chart, AUD/CAD has retreated from recent highs and is now trading near the lower boundary of its previous consolidation range. The 0.9780-0.9820 area is gradually developing into a new support zone.

Recent candlesticks have become progressively smaller, while price volatility has declined noticeably, indicating that bearish momentum is fading and the market is entering a classic bottoming process. From a structural perspective, as long as the previous swing low remains intact, the current decline is more likely to represent a corrective pullback within the broader uptrend rather than the beginning of a new bearish cycle.

Meanwhile, the moving average system is beginning to flatten, with the gap between short- and medium-term moving averages continuing to narrow. This suggests that the market is accumulating momentum for its next directional move. Once the pair reclaims the 0.9850 resistance area, bullish momentum is expected to strengthen further.

A decisive break above the 0.9900 psychological level would likely improve market sentiment significantly, paving the way for a move toward the key 1.0000 resistance. Besides being a major psychological milestone, this level also coincides with a previous high-volume trading zone, making it a critical medium-term upside target.

Overall, as long as the lower boundary of the trading range continues to hold, AUD/CAD's medium-term bullish structure remains intact. The current sideways consolidation is viewed as a base-building phase before another advance, with the pair expected to gradually extend its rally toward the 1.0000 handle.

Trade Recommendation

Direction: Buy

Entry Price: 0.9780

Target Price: 1.0100

Stop Loss: 0.9575

Valid Until: 2026-07-28 23:55

Support: 0.9766, 0.9745, 0.9724

Resistance: 0.9834, 0.9868, 0.9943

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