AUDCAD has been moving sideways between support around .8785 and resistance at the .9100 major psychological mark. Price is closing in on the top of the range, so a bounce or break might follow.

A bounce could take the pair back down to support or at least until the area of interest around the .9000 major psychological mark. The 100 SMA is below the 200 SMA to suggest that the path of least resistance is to the downside or that the ceiling is more likely to hold than to break.

However, AUDCAD is trading above both moving averages, so these could hold as dynamic support on dips to the .8900 major psychological mark.

Stochastic is already indicating overbought conditions or exhaustion among buyers, so heading south could confirm that bearish pressure is picking up. RSI is also starting to head south from the overbought area, so a return in selling momentum could follow.

Earlier this week, the BOC hiked interest rates by 0.25% as expected and signaled scope for further tightening. However, this resulted to a decline for the Loonie, as the prospect of higher borrowing costs meant more downside for business and consumer activity.

In contrast, the possibility of more stimulus from the PBOC on account of weaker Chinese inflation and trade activity has lifted AUD. This would likely mean stronger demand for its commodity exports, including iron ore and other raw materials needed in the property sector.

Risk appetite stemming from weak US CPI and PPI figures also lifted riskier currencies like the Aussie and Kiwi, as the prospect of lower borrowing costs could mean more upside for global business and consumer activity.

Still, it’s worth noting that rising oil prices could benefit the correlated Loonie, as supply conditions are dampened by production cuts and unplanned disruptions in Libya.