USD/CAD: Bearish bias holds below resistance – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is slightly firmer with USD/CAD holding near prior ranges. A softer US Dollar (USD) and firmer risk appetite are seen as mildly supportive for the CAD, while fair value has shifted lower toward 1.3424. Technicals remain bearish, with focus on a move back toward the 1.35 area.

CAD supported as fair value drops

"The CAD is edging a little firmer in early trade here but spot is holding close to yesterday’s ranges. A somewhat softer USD and some potential firming in risk appetite should be mildly CAD-supportive in the short run"

"Broader factors continue to tilt positively for the CAD, driving our fair value estimate for spot lower to 1.3424 this morning. The USD remains close to 1 standard deviation above its equilibrium estimate which should help limit USD gains and maintain a mild downward bias on spot at least."

"Bearish—Minor USD gains overnight topped out around 1.3625/30, former support (76.4% Fibonacci of the USD’s March rally)."

"The sustained break under retracement support plus the bearish alignment of trend oscillators across the intraday, daily and weekly studies maintains our focus on the potential for USD losses to extend back to the early March low at 1.3525 now."

"A collection of lows and weekly trend support at 1.3520 may bolster USD support around 1.35."

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

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FXStreet Insights Team

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