Canadian Dollar: Further gains eye 1.35–1.37 against US Dollar - Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret report USD/CAD trading near equilibrium around 1.3870, with Canadian Dollar (CAD) fundamentals supported by narrower front-end spreads and firm crude prices. They see investors relatively unconcerned by looming US tariff deadlines. Technically, they describe a strong bearish trend, expecting selling interest near 1.39 and highlighting downside risks towards 1.3817 and potentially the 1.35–1.37 range.

CAD supported as USDCAD trend bearish

"The CAD is shrugging off softer global stocks and the mild rebound in the USD to trade little changed on the day. It is a marginal outperformer within the G10 group as a result."

"Fundamental CAD drivers remain supportive, via narrower front-end spreads mainly although firmer crude prices will also help at the margin. This is reflected in a modest decline in our fair value estimate for spot which has slipped to 1.3843 today."

"The fact that the CAD is trading close to its estimated equilibrium suggests investors are not overly concerned by tomorrow’s tariff deadline which may see 50% tariffs levied on a small range of Canadian exports. Talks are ongoing but remain bogged down on autos, reports suggest. PM Carney indicated that he expected to speak with President Trump before the deadline."

"Bearish—Spot’s rebound off the 200-day MA at 1.3848 yesterday may disrupt the developing technical bear trend in USD/CAD in the short run. Underlying trend dynamics remain strong and mild USD rebounds are liable to draw firm selling interest towards the 1.39 area."

"We think the bearish alignment across intraday, daily and weekly DMI oscillators keeps the primary trend lower and geared towards a test of 1.3817 (61.8% retracement of the May/June USD rise). The risk of a deeper slide to the 1.35/1.37 range is rising. We spot firm resistance at 1.4000/25."

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