USD/CAD: Range trading bias favors fading rallies – Scotiabank
|Scotiabank strategists Shaun Osborne and Eric Theoret, notes the Canadian Dollar is ended the week slightly stronger versus the US Dollar, with cross-currents from equities and crude. Their fair value work and week-ahead model point to continued USD/CAD range trading, with upside likely capped near 1.37 and technical signals turning increasingly USD-bearish.
USD/CAD seen capped near 1.37
"Spot is trading a little above our fair value estimate (1.3625) but the misalignment is not significant. Note that inputs into the model continue to edge in the CAD’s favour on a trend basis which should help limit scope for USD gains, all else equal."
"Our week ahead model anticipates more range trading for spot within a 1.3581/1.3786 range (75% confidence). The gut feeling on the strategy desk is that USD gains are likely to remain contained to the 1.37 area for now, however."
"Secondly, the USD remains below key, long-term resistance around 1.37. We noted the USD’s break under trend support/bearish Head & Shoulders trigger earlier this month."
"Note that daily trend momentum (DMI) is weak but edging towards a USD-bearish signal. Weekly and monthly DMIs are firmly USD-bearish."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.