Technical factors point to a sustained uptrend – Scotiabank

USD/CAD hovers around the 1.36 level. Economists at Scotiabank expect the pair to continue its grind higher.

Little scope for CAD gains

“Our week ahead model suggests little scope for CAD gains and a potential 1.3460/1.3770 range for funds. All else equal though, the base for the USD is likely to be somewhat higher in the 1.3550/00 range.”

“Weaker stocks, reflecting rising short-term rates, remain a major headwind for the CAD, given its still strong, positive correlation with US equities.”

“Short, medium and longer-term DMI oscillators are aligned bullishly for the USD which typically means a strong, underlying uptrend is underway with limited potential for counter-trend corrections.”

“The 1.3550/60 zone now is key support from a technical point of view.” 

“Gains have extended to near the 1.37 area (late 2022 highs) which may provide some stronger resistance to the USD advance. But the strength of the underlying trend suggests some risk at least of an overshoot to the 1.3820/30 zone.”