Mapping the Market: Loonie versus aussie tells trade-tension tale for Canadian dollar

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. Click here for a more detailed chart.

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:

(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)