The Canadian Dollar (CAD) is softer, losing ground against a generally stronger USD, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
USD’s technical undertone is weakening
“Tariffs are having an immediate impact on the domestic economy, with 6k auto workers temporarily idled by Stellantis as a result of this week’s tariff news. Our USD/CAD fair value estimate has weakened below 1.40 for the first time since November, largely reflecting the generally soft USD undertone.
“But that does shift the likely range for USD/CAD lower and limit the USD’s ability to strength – perhaps to somewhere around the 1.4250 area – for now. The USD is tracking a little higher intraday and short-term, corrective gains may extend modestly.”
“But the USD’s technical undertone is weakening – the daily DMI study has flipped to USD-bearish for the first time since October – which should serve to limit the USD’s ability to strengthen and hold gains. Resistance sits at 1.4240/50, the start of a deep band of congestion that extends up to 1.4400/20. Fade USD gains.”
Read the full article here