The Canadian Dollar (CAD) is trading flat against the US Dollar (USD), underperforming other G10 currencies due to its differentiated risk profile, according to Scotiabank’s Global FX Strategy team, including Shaun Osborne and Eric Theoret [1]. The analysts note that the CAD’s relative underperformance is understandable, as it is less vulnerable to weakness during periods of risk aversion but also less likely to strengthen during times of increased risk appetite [1].
The near-term direction for USDCAD is being driven by expectations around the relative policies of the Bank of Canada (BoC) and the Federal Reserve, with a material widening in interest rate differentials. This reflects a softer repricing of the BoC’s policy path compared to a firmer outlook for the Fed [1]. Key domestic events for the CAD this week include a speech by BoC Deputy Governor Vincent on Tuesday, the release of the Financial Stability Report on Thursday, and Q1 GDP data along with the March monthly print on Friday [1].
From a technical perspective, the Relative Strength Index (RSI) for USDCAD is bullish, climbing into the mid-60s and approaching the overbought threshold at 70. The 200-day moving average at 1.3812 is providing short-term resistance, with additional resistance seen as limited ahead of 1.39. On the downside, there is little support before 1.375, near the 50-day moving average at 1.3749 [1].
CONCLUSION
The Canadian Dollar is currently lagging its G10 peers, with market focus on upcoming Bank of Canada events and economic data. Technical indicators suggest limited further losses against the US Dollar, with resistance and support levels clearly defined. The market is closely watching central bank policy divergence for further direction.