Canadian Dollar: Overbought Dollar holds near 1.40 ceiling – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret observe that the Canadian Dollar (CAD) is weighed down by weaker Oil prices linked to Iran peace hopes, even as improved risk appetite offers some support. They argue that a broadly lower US Dollar is still needed for a more constructive CAD outlook. Technically, USD/CAD remains overbought with bullish momentum, and risk persists for a push into the 1.40–1.41 congestion range.

CAD pressured by energy, eyes 1.40 zone

"The CAD did not get much lift from higher oil prices but does appear to be getting weighed down by the drop in energy prices around Iran peace hopes."

"A rebound in risk appetite should be somewhat positive for the CAD and may help offset lower energy prices to some extent but the CAD is still not master of its own destiny and a broadly lower USD is really what the CAD is looking for to improve."

"At the very least, the bounce in stocks and somewhat softer USD tone should strengthen the ceiling on funds around the 1.40 point."

"Neutral—The USD sustains a positive undertone but the intraday range is holding within yesterday’s range, a potentially neutralizing signal for price action in the short run. The USD remains overbought but trend momentum is still bullish."

"Price signals are not signaling a peak is in place—and even if they did, this week’s moves suggest a high degree of caution is still required. Risk remains for a push into the 1.40-1.41 congestion range from Q4. Support is 1.3900. "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)