The Canadian Dollar (CAD) continues to exhibit a soft undertone, according to Scotiabank strategists Shaun Osborne and Eric Theoret, despite recording its first net gain against the US Dollar (USD) in eight sessions. This modest improvement was attributed to firmer May Consumer Price Index (CPI) data and steadier US–Canada yield spreads, which provided a minor reprieve for the CAD [1].
However, the strategists express skepticism regarding a reversal in yield differentials in the near term, suggesting that CAD underperformance is likely to persist unless there is a broader shift in the USD outlook. They note that the USD bull trend remains strong and technically overbought, with the daily Relative Strength Index (RSI) at 87—higher than levels seen during previous USD surges in early 2025 and 2020, when the USD reached 1.47/1.48 [1].
From a technical perspective, the analysts indicate that if the USD breaks above the 1.41 level, the rally could extend toward the 1.43–1.45 range. While the recent CAD rebound may signal a temporary pause in the USD bull trend, there is little in the current price action to suggest a significant recovery for the Canadian Dollar at this time [1].
CONCLUSION
The Canadian Dollar remains under pressure, with only a minor gain against the USD amid persistent yield differentials and a strong USD trend. Technical analysis points to the potential for further USD gains if key resistance levels are breached, suggesting continued CAD weakness in the near term.