Usdcad To Stay Bearish Scotiabank

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Usdcad To Stay Bearish Scotiabank

Usd/Cad To Stay Bearish - Scotiabank

According to the latest forecast from Scotiabank, the USD/CAD pair will stay bearish in the medium term. A quick look at the charts shows the CAD is on the back foot. Meanwhile, the market is now also digesting the financial stability report from BoC.

However, the news from the US side isn't that good and weighs heavily on the Canadian Dollar. The US President made it clear that Canada's PM can't say anything that would convince the US to pause the tariffs.

Usd/Cad Trades At Fair Value

But despite the recent weakness in the CAD, the trading price of USD/CAD shows it is near fair value. According to Scotiabank, the fair value is near 1.3824 and the USD/CAD is trading below that.

Looking ahead, the USD/CAD traders are now waiting for domestic releases in the USA and Canada to get fresh cues. The key events to watch include employment data, central bank meetings, and trade tariffs.

The short-term trend shows the USD/CAD is highly likely to remain in the downtrend. However, the momentum appears to be waning, as evident from the bearish trading channel.

Also, the technical indicators show a difference between the momentum and price of the USD/CAD. So, that means we are highly likely to see an upward move in USD/CAD soon.

Scotiabank added that the divergence is increasing, and it can be confirmed by the RSI indicator. The nearest resistance is around 1.3880, while the support is around 1.3720.

However, the one thing to note here is that there are increased risks of recession in the USA. If the recession actually happens, it would be bearish on the US Dollar.

In that case, the USD/CAD will take a nose-dive and start to trend lower. When that happens, the support levels to watch include 1.3720, 1.3600, and then 1.3400.

Also, rate cuts from the Fed that outpace the BoC could also change the dynamics of the USD/CAD.

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