CAD consolidating within a right range and finding support from spreads – Scotiabank

The Canadian Dollar (CAD) is entering Friday’s NA session flat vs. the USD as it consolidates around the midpoint of this week’s range, Scotiabank's Chief FX Strategist Shaun Osborne notes.

RSI drifts back to neutral levels around 50

"Yield spreads remain in focus as markets consider the latest run of soft US data and their implications for Fed policy, offering up the possibility of a pause in the recent widening that has been a near-term headwind for the CAD. The stabilization in oil prices is also welcome and helping to steady our FV estimate for USD/CAD, which now stands at 1.3970."

"Friday’s domestic release calendar is limited to the international securities transactions data for March (8:30am ET) and there are no major releases scheduled ahead of Tuesday’s CPI. BoC Gov. Macklem is also scheduled to speak next Thursday, on the sidelines of the G7 meeting in Banff. The latest countertrend recovery in USD/CAD looks to have lost momentum."

"This week’s range has revealed considerable resistance above 1.4000 with support observed around 1.3900. The RSI has drifted back to neutral levels around 50, indicating a loss of momentum. The 200 day MA (1.4021) remains an important level to watch, in terms of upside risk, given USD/CAD’s inability to break above it this week. Recent congestion appears centered around the pivotal 61.8% retracement of the September-February rally.