USD/CAD: Minor USD rebounds are liable to attract renewed selling interest – Scotiabank

FXStreet Insights Team FXStreet

The Canadian Dollar (CAD) has slipped back amid the broader rebound in the USD vs US Dollar (USD). USD gains have taken funds back to the mid/upper 1.37s and largely reflect the rebound in the USD rather than any CAD-negative development, Scotiabank's Chief FX Strategist Shaun Osborne notes.

CAD eases on the daily chart

"The CAD’s unusual, negative relationship with risk appetite remains intact, given the broader gains in stocks. Modest USD gains are liable to run into renewed USD selling interest relatively quickly. The latest IMM data released Friday reflected another jump in net CAD shorts last week as speculative traders and investors responded to soft economic data (and speculation about BoC policy) and spot’s test of the 1.40 area earlier this month."

"But elevated core inflation and the ongoing uncertainty over US tariff policy suggests the BoC is likely to remain on hold in the short run at least while the CAD’s strong reversal from the 1.40 zone may extend, testing the resolve of the build-up of short interest in the CAD since the start of May. And if the weak stocks/soft USD trend remains intact, Canadian portfolio managers may have to increase their FX hedges, adding to CAD tailwinds."

"USD gains have extended through the 1.3745/50 area that served as support for USDCAD earlier in May but the USD advance may not extend too far. Broader technical signals are USD-bearish and trend strength oscillators remain bearishly-aligned for the USD across the short-, medium– and longterm studies. Typically, this situation only allows for limited counter-trend corrections (higher, in this case). I anticipate firm USD resistance between 1.3785/1.3815 in the short run. USD support is 1.3740 (minor) and 1.3685/90."

Author

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.

AUD/USD stays bid above 0.7100 on Australian trade data, Mideast optimism

AUD/USD clings to minor recovery gains above 0.7100 in the Asian session on Thursday as a new Israel-Lebanon ceasefire keeps a lid on the safe-haven US Dollar. Meanwhile, strong AustralianTrade Balane data also help the Aussie pair sustain the bounce from weekly lows.

USD/JPY hovers near the 160.00 intervention threshold on Mideast tensions

USD/JPY struggles to find acceptance above 160.00 and retreats from a one-month high in the Asian session on Thursday amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, a new Israel-Lebanon ceasefire caps the US Dollar and supports the currency pair. However, renewed US-Iran tensions keep the downside limited in the Greenback and the pair.

Gold rebounds from one-week low as Israel-Lebanon truce pressures safe-haven USD

Gold gains some positive traction on Thursday and climbs to the $4,475 area during the Asian session, reversing a major part of the previous day's slide to a one-week low. The Israel-Lebanon truce prompts some profit-taking around the US Dollar and supports the commodity.

Ethereum: Long-term holders' capitulation drives ETH below $1,800

Ethereum has fallen below $1,800 on Wednesday, the first time since May 2025 following accelerated spot selling pressure and distributions from long-term holders. The Age Consumed metric, which tracks the movement of previously idle tokens or long-term holders' coins, spiked over the past two days as prices declined, indicating increased selling activity among this cohort.

Kevin Warsh takes the Fed helm: What it means for the US Dollar

The Federal Reserve moves away from the highly predictable "forward guidance" model of the Jerome Powell era to a new “Kevin Warsh environment”, characterized by less communication, more policy surprises, and an increased focus on the Fed's complex balance sheet.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.