It’s likely a busy week ahead for AUD/CAD as we’ll get the top tier economic data from both Australia and Canada. Will these latest updates push AUD/CAD to break support or will the bulls get the pair to bounce?
Range Bottom Break Ahead in AUD/CAD?
A little over a week ago we were watching AUD/CAD for a potential range top reversal, and it looks like that played out nicely as the the bears were able to hold off a brief spike to the 0.9400 and push the market to nearly retest 0.9200 last week.
Since then the bulls have defended the previous swing low area around 0.9250 steadily, and it’s possible the pair may be in for a bounce back to the middle of the range. But that potential price action is highly depended on this week’s forex calendar, which is sporting top tier events from both Canada and Australia.
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On Wednesday, we’ll get the latest consumer prices data from both Australia and Canada to shake up the pair, followed by a GDP update from Canada on Friday to likely keep the action going in the pair into the weekend.
Expectations are that Aussie CPI will likely come in hot vs. a possibly mixed CPI read from Canada. If that plays out, that double formation may hold and possibly draw in both short-term long positions and/or profit takers from short positions held last week.
In this scenario, we’d be on the look out for day trades to take advantage of that move, but we’ll also be on the look out for resistance around the top of the range to play the longer-term trend lower.
If we get surprises from either read favoring the Loonie over the Aussie more (i.e., a tick higher in all components of Canadian consumer inflation data, weaker-than-expected Australian CPI data), then there may be a move lower on AUD/CAD. In that scenario, we’ll watch for a sustained break below the 0.9200 – 0.9220 area before considering a short position.
What do you guys think? Is AUD/CAD going to break the range or will the bulls have a chance to make quick profits this week?
