The Reserve Bank of Australian decided not to change the interest rates for the Delta variant of Covid has hit the nation hard like a tsunami with death tolls reaching high on the graphs with vaccination program not being efficient enough to tackle the decline in economic indicators. Since the beginning of year 2021, Aussie has fell in both of the first two quarters losing 30-35% of its gains as compared to the last two quarters of 2022 on the monthly chart. The AUDUSD falling wedge breakdown has also caused more room for dovish momentum and the pair is consolidating the latest leg down to seven-month lows of 0.7409, as the bears take a breather, awaiting fresh trading impetus.

Flatter yield spread between Australian and US government bonds, China's trade punishment of Australia is set to continue, world’s emergence from the crisis to erode Australia's advantage, China also appears to have enacted a ban on Australian coal imports and the RBA reducing cash rate; extending curve control; buying more bonds are some of the major fundamentals which will be creating room for sellers more than buyers. 

AUDCAD, under the current markets condition will set to continue its bearish rally because of failing to break above its nearest major resistance at 0.94000 which is also a key price action level with intraday exponential moving averages also restraining the pair from moving any higher. The correction in the pair was suppose to end at 0.92500 but seems that the pair has already entered into a bearish rally and will be focusing more on creating positions in selling zone.

AUDCAD is also standing above 61.8% fibb level which provided it with an upthrust to readjust its RSI getting its head up at 40.2. We are expecting for the pair to fall towards 0.91000 as its final destination where the 50% fibb level will provide the pair with a strong bullish reversal towards the support turnedinto resistance after a breakout at 0.92600.

AUDCAD warming up for a bears to take over

Jul 09 2021

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