Scotiabank Sees CAD/USD Breaking Through Key Support
The Canadian Dollar (CAD) is showing strength against the US Dollar (USD), according to Scotiabank strategists Shaun Osborne and Eric Theoret. This gain in CAD value is being supported by a broader dollar weakness, as well as demand for high-beta currencies and narrowing front-end spreads.
Uncertainty around US-Canada trade has also been fading, which is contributing to the Canadian Dollar's performance. In their analysis, Osborne and Theoret see scope for a deeper retracement of USD/CAD's May-June rally, with potential for a move toward the 1.35 handle against the US Dollar.
The strategists point out that the CAD is slightly firmer on the session due to the soft dollar tone overall and bid for high beta FX at the margin. However, they caution that sustained weakness below retracement support at 1.3817 along with the bearish alignment of intraday, daily and weekly DMI oscillators maintains their technical focus on a deeper (perhaps full) retracement of the USD's May/June rally back to 1.3550.
A push through key medium-term support at 1.3715/30 ahead of the weekend would target a 1.35 handle, while resistance is seen at 1.3795/00.