AUDCAD has continued to descend after breaking below the key 1.0300/25 level of support highlighted on May 6th.   This Aussie weakness has continued over the past 24-hours as AUDUSD broke below the 0.9860/90 support zone highlighted yesterday: 23.6% retracement, 200-week sma and triangle support.

Currently, AUDCAD is testing parity, with the 200-week sma just below around 0.9995. Considering AUDUSD broke below its respective 200-week sma overnight, it would not come as a major surprise to see AUDCAD follow suit. Furthermore, with weekly RSI’s repeated failure into the key 65 level over the past few years, it indicates the Aussie cross may be setting the stage for a continued downtrend.

That said, AUDCAD still sees a key long-term support zone at 0.9925/35, which sees the convergence of:

• 23.6% retracement (of the 2008-2012 rally)
• November 2009 high
• August & October 2010 lows
• October 2012 low

On the Canadian data front, keep an eye on tomorrow’s April Consumer Price Index (8:30am ET)– Market expectations are for a decline to +0.6% YoY from 1.0% in March. Should this occur, it could allow for a potentially more dovish bias from the new head of the Bank of Canada, and as a result weigh on the Loonie.

However, should 0.9925/35 give way, the next key support levels to focus on are 0.9635 (Jan. 2010 high & 2011 low), followed by 0.9400/05 (38.2%retracement of the 2008-12 advance) over the coming days/weeks.

Chart Source: Forex Charts by eSignal