The Canadian Dollar (CAD) is trading flat compared to Tuesday’s close but remains one of the stronger performers among G10 currencies, according to FX strategists Shaun Osborne and Eric Theoret at Scotiabank. The loonie is consolidating near key technical levels, showing resilience in a market dominated by broad-based US Dollar (USD) strength.
Trade Optimism Supports CAD Sentiment
Positive sentiment around a potential Canada–US trade agreement is lending support to the CAD. Recent talks, including a meeting between former US President Donald Trump and BoC Governor Andrew Carney, have signaled progress on easing sectoral tariffs, which is helping underpin the currency.
However, concerns persist around Canada’s fiscal outlook, especially after Monday’s announcement highlighting budgetary challenges. Markets are now focused on the upcoming federal budget release on November 4.
Bank of Canada in Focus
Attention is also turning to the Bank of Canada (BoC), with a key speech expected Thursday from Senior Deputy Governor Carolyn Rogers. Markets are watching closely for any signs that policymakers may push back against current dovish expectations. While dovish central bank sentiment contributed to CAD weakness in Q3, Scotiabank sees potential upside for the loonie if the BoC shifts toward a less accommodative tone.
The bank’s fair value estimate for USD/CAD is currently 1.3734.
Technical Outlook: USD/CAD Stalls Below 1.40
- Momentum Indicators: RSI has stalled in the low 60s, suggesting moderate bullish momentum.
- Key Resistance Levels: USD/CAD is struggling to break above the 61.8% Fibonacci retracement of the September 2024–February 2025 rally at 1.3944, with additional resistance at the 200-day moving average (1.3980) and the psychological 1.4000 level.
- Support: Near-term support is seen at 1.3920, keeping the pair in a tight range between 1.3920 and 1.3980 for now.
Outlook:
With trade optimism and potential central bank repricing in play, the CAD may find room to strengthen in the near term — especially if BoC rhetoric shifts. However, fiscal concerns and technical resistance for USD/CAD remain limiting factors.
