Scotiabank strategists cite narrowing spreads and fading trade uncertainty as catalysts for CAD gains against USD.
The Canadian Dollar (CAD) is extending gains against the US Dollar (USD), driven by broader dollar weakness and demand for high-beta currencies. Scotiabank strategists highlight narrowing front-end spreads and reduced US-Canada trade uncertainty as key supports for CAD strength, with technicals pointing to a potential retracement toward 1.35 in USD/CAD.
The pair has already retraced roughly 1% this week, with intraday, daily, and weekly DMI oscillators aligning bearishly for the USD. Key support lies at 1.3715/30, a break below which could target the 1.35 handle. Resistance is pegged at 1.3795/00, while fundamentals remain favorable for further CAD appreciation.
CAD is outperforming core European currencies but trails the Australian Dollar (AUD) and New Zealand Dollar (NZD) in recent sessions. The technical outlook suggests a deeper correction of USD/CAD’s May-June rally may be underway.