Scotiabank analysts cite narrowing front-end spreads and CAD short-covering as key drivers for the pair’s drop toward 1.3981.
The Canadian Dollar (CAD) strengthened against the USD, pushing USD/CAD toward 1.3981 as technical support. Firmer oil prices and narrowing front-end spreads offset weak equities, while position adjustments after heavy CAD short-building added momentum.
The pair breached the 23.6% retracement level at 1.4083, with bearish oscillators signaling further downside. Analysts view mild USD rebounds below 1.41 as selling opportunities, reinforcing the negative technical bias.
CAD gains reflect a shift in market dynamics, with positioning and spread movements driving the trend lower into week-end.