Scotiabank strategists Shaun Osborne and Eric Theoret report that the USD/CAD currency pair continues its bullish trend, trading well above the estimated fair value of 1.3543, with recent price action extending through the low 1.38 area and breaking above the 200-day moving average at 1.3805 [1]. The Canadian dollar (CAD) is under pressure as haven demand for the US dollar (USD) dominates FX trading, particularly in an environment characterized by low volume and low conviction [1]. Fundamental factors have shifted against the CAD, including widened front-end spreads favoring the USD and a modest softening in Canadian terms of trade [1]. Technical analysis indicates that trend momentum favors further USD gains in the short run, with risks pointing toward the low 1.39s. Support levels are identified at 1.3790/00 and 1.3750/60 [1]. The strategists note that the CAD has little ability to counter the prevailing trend, and the relatively easy advance through resistance in the mid-1.37s and low 1.38s underscores the firm USD undertone [1].
CONCLUSION
USD/CAD is exhibiting strong bullish momentum, trading well above its estimated fair value as haven demand for the USD persists. Technical and fundamental factors suggest further upside risk for the pair, with support and resistance levels clearly defined. The market takeaway is a continued preference for USD strength, with CAD remaining pressured in the near term.