RBA credibility worries shadow AUD/CAD amid weak momentum and support pressure

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Highlights

Reserve Bank of Australia Deputy Governor Andrew Hauser warned that public trust in the central bank's inflation control is fading.
Concerns over Australian monetary policy effectiveness and persistent above-target inflation have pressured the Australian Dollar versus major peers.
AUD/CAD shows bearish technical momentum with price trading below key moving averages and a forecast range of C$0.9625 to C$0.9721 for the next two to three days.

Negative flows build as RBA credibility concerns spur bearish sentiment

On November 5, Reserve Bank of Australia Deputy Governor Andrew Hauser warned that the public's confidence in the central bank's ability to control inflation was eroding, highlighting the ongoing challenge of tackling above-target inflation alongside the impact of higher borrowing costs, according to Investing.com. This has heightened concerns over the effectiveness of Australian monetary policy, leading to weaker sentiment for the Australian Dollar against its major counterparts. The remarks have contributed to negative positioning in AUD/CAD as market participants re-evaluate policy risks and currency outlook.

Bearish momentum mixed with overbought signals as support limits relief

AUD/CAD is positioned below the MA-20 at C$0.9707, the MA-50 at C$0.9755, and the long-term MA-200 at C$0.984, with the Ichimoku Kijun at C$0.9723 acting as nearby resistance. MACD and ADX both indicate a sell bias, while RSI and CCI remain neutral, and Stochastic RSI is in the overbought zone, hinting at possible short-term exhaustion but lacking confirmation of a reversal. Bull/Bear Power is slightly negative at -0.0011, suggesting mild seller dominance intraday. The Awesome Oscillator is neutral, and a mixed oscillator backdrop reflects some divergence between short-term overheating and overall bearish momentum.

Downside risks persist while volatility caps breakout potential

Looking ahead over the next two to three trading days, AUD/CAD is expected to consolidate between C$0.9625 and C$0.9721, reflecting typical volatility for the pair. The likelihood of an upside breakout appears very low, while downside risk remains elevated. In the primary scenario, prices remain bounded by support and resistance, but a move above the Ichimoku Kijun or below the support band could signal a directional shift and reinforce short-term trend momentum.

Viktoras Karapetjanc, Traders Union expert, notes that the AUD/CAD pair remains pressured by persistent concerns over central bank credibility and ongoing inflation challenges. He believes that recent signals from the Reserve Bank of Australia have undermined sentiment towards the Australian Dollar, especially given technical weakness below key averages. The analyst sees limited potential for an upside breakout in the near term, with price action likely to stay capped by resistance at C$0.9723. "I think AUD/CAD will likely remain range-bound amid policy uncertainty, and only a shift in sentiment or clear policy guidance can alter the current outlook," Karapetjanc concludes.

Earlier, analysts noted that persistent bearish momentum remained the dominant theme for AUD/CAD, with technical indicators highlighting ongoing downside pressure. The current analysis reaffirms this view, with continued weakness below key moving averages and mixed short-term signals suggesting traders should monitor the C$0.9723 resistance and C$0.9625 support as pivotal levels for potential directional shifts in the coming sessions.

Source of Data: AUD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.