USD/CAD: Bearish trend holds with key levels in focus – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret say the Canadian Dollar (CAD) is slightly softer but continues to narrow its undervaluation versus the Dollar, with fair value around 1.3542. They stress that further CAD gains depend on fading USD haven demand. Technically, they describe a still-intact USD downtrend, stronger bearish momentum and nearby resistance at 1.3800/20 and support at 1.3745/50.

CAD undervaluation narrows as USD fades

"The CAD has made progress in narrowing its undervaluation against the USD this week (spot fair value is estimated at 1.3542 today) but price action reflects the fact that narrowing that valuation gap relies mainly on a reduction in the USD haven demand."

"Neutral/bearish—The USD’s mild downtrend from its late March peak remains intact but spot is tracking a tight, inside range (i.e., inside yesterday’s range) on the day, indicating a degree of indecision creeping into price action in the short run."

"Broader trends are bearish, with the USD crashing through important support points this week, while bearish trend momentum signals are strengthening on the shorter-term studies."

"We look for resistance on minor gains to the 1.3800/20 zone."

"Support is 1.3745/50 (50% retracement of the March advance in the USD)."

(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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