USD/CAD: Bear trend extends with downside risks – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is little changed versus the US Dollar (USD), trading around the midpoint of Tuesday’s range. April’s broader USD decline has largely closed CAD’s valuation gap to fair value near 1.3563. With only modest support from Oil and equities, analysts see limited additional CAD upside without a broader USD drop.

Bearish trend keeps downside risks alive

"The CAD is little changed, marking a very minor gain on the USD through overnight trade that essentially leaves spot trading rather indecisively around the mid-point of yesterday’s range."

"The overall drop in the USD through April so far—recall that this is typically the best month of the calendar year for CAD returns against the USD—has closed the CAD’s valuation gap with estimated fair value (1.3563 currently) but the mix of modestly higher crude oil prices and flattish stocks today seem unlikely to give the CAD more lift—absent a more general drop in the USD."

"Bearish—Spot is tracking a flat course intraday and minor gains for the USD yesterday overall were nowhere near enough to signal that the broader bear trend in the funds is reversing."

"Trend momentum remains strongly bearish for the USD across a range of timeframes which limits the USD’s ability to recover and keeps directional risks tilted to the downside for USD/CAD."

"Support remains 1.3625/30 ahead of a push to the low 1.35 region."

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

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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