AUD/CAD tests the top of its triangle

AUD/CAD is approaching an interesting technical decision point, with price pushing back towards the upper boundary of a multi-month triangle near 0.9920–0.9940.

The pair has spent much of the summer consolidating after the strong rally seen earlier this year. Since June, AUD/CAD has effectively compressed between falling resistance around 0.9940 and rising support from roughly 0.9750. That tightening range suggests volatility is being stored, with the latest move putting the upper boundary back under pressure.

From a technical perspective, a daily close above roughly 0.9940 would be the cleaner bullish confirmation. That would break the sequence of lower highs within the consolidation and potentially reopen the path towards the previous highs around 0.9950, followed by the psychological 1.0000 area.

Failure to break, however, would keep the triangle intact and leave AUD/CAD vulnerable to another rotation back towards the middle and lower end of the range.

Fundamentals offer some support to the Australian Dollar

The macro backdrop also provides an interesting relative story.

The Reserve Bank of Australia currently holds its cash rate at 4.35%, after raising rates three times earlier this year. Inflation remains above target and the RBA continues to describe price pressures as too high, meaning Australian monetary policy is likely to remain comparatively restrictive.

There is a caveat. Australia’s labour market has started to cool: unemployment increased to 4.5% in July, while employment unexpectedly declined. That reduces the urgency for additional RBA tightening and represents the main risk to the bullish AUD side of the story.

The Canadian dollar, meanwhile, faces a more idiosyncratic headwind. US–Canada trade tensions have escalated sharply, with negotiations breaking down and Canada preparing retaliatory tariffs. The Canadian dollar weakened following the latest escalation, while preliminary data also suggests Canadian factory sales slipped in July.

That creates a potential relative divergence:

Sticky Australian inflation → RBA remains comparatively restrictive → AUD support.

while

Canadian trade uncertainty → growth risks increase → CAD pressure.

What to watch

For now, the macro backdrop supports the bullish technical setup, but price still needs to confirm it.

Bullish trigger: daily close above 0.9940.

Key resistance: 0.9950, then 1.0000.

Bearish invalidation: rejection from resistance followed by a move back through the recent 0.9830–0.9850 area.

The triangle is therefore the key battleground. A confirmed breakout would suggest the Australian dollar is beginning to translate its relative macro advantage into price.