NEW YORK, Aug 28 (Reuters) - The Canadian dollar has held up relatively well against the U.S. currency since Donald Trump took office in January 2025, suggesting tariff hostilities haven't caused major weakness. But the loonie's slide against the Australian dollar looks more telling, and technical analysis suggests it may be on the cusp of a bigger drop.
Usually quoted in Australian dollars per Canadian dollar, a rising price graph means the Canadian dollar is weakening.
Amid the recent flare-up in U.S.-Canada trade tensions, the aussie climbed to 0.9979 against the Canadian dollar, its highest level in five and a half years, according to data supplied by LSEG.
If it can surpass the February 2021 peak of 0.9993, the aussie would be on the path to parity, which would be a significant development since large round numbers – particularly the one-to-one mark — can often slow or accelerate a market move. Previous highs, especially monthly, are also closely watched.
Clearing parity could open the way to the March 2018 high near 1.02 and the November 2016 peak around 1.04, though congestion builds as prices near the top of their 30-year range just above 1.10.
However, the loonie's weakening trend could stall if the aussie slips back below the upper Bollinger band at 0.9946 and the May 2026 high of 0.9958. Bollinger bands are a moving-average-based system that helps technical analysts measure volatility and determine whether a market is overbought or oversold.
Such a pullback could send traders looking to support around 0.9897-0.9908, while a break below 0.9750 would be needed to confirm a bullish turn for the Canadian dollar.
What the chart shows:
Aussie at 5-1/2-year high of 0.9979 versus loonie
Break above 0.9993 would target parity, then 1.02 and 1.04
Drop below 0.9750 needed to signal Canadian dollar strength
(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.)
Robert Fullem is a Reuters market analyst. The views expressed are his own. Editing by Burton Frierson and Lisa Shumaker
