The CAD weakened against a stronger USD over the past week. Scotiabank economists analyze the outlook for USD/CAD.
Short-term bearish technical background
1) The pair is trading close to its fair value, but factors are moving against the CAD in the model. 2) Risk appetite (i.e. equities) remains a key driver of near-term CAD movement, and the rising rate environment and tense geopolitical backdrop suggest some headwinds, at least for the actions. 3) According to the TRIX oscillator, the USD rebound is by no means overstated. Overall, the risks seem to lean towards further softness for the CAD, at least in the short term.
Fresh lower lows for the USD today keep the short-term bearish technical tone for USD/CAD below the short-term bullish channel support at 1.3440 and make last week's failure at the 1.3540 Fibonacci resistance still look more significant now.
Congestion support at 1.3350/1.3400 area could stem USD losses from here.
Resistance is seen at 1.3445/1.3450.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
