The Canadian Dollar (CAD) remains flat against the US Dollar (USD), continuing to consolidate around key technical levels, according to Scotiabank Chief FX Strategists Shaun Osborne and Eric Theoret.
Market Sentiment Neutral Ahead of BoC Speech
Markets are focused on the upcoming speech from Bank of Canada Senior Deputy Governor Carolyn Rogers, scheduled for 8:15 a.m. ET. In the meantime, yield spreads remain steady and provide little directional guidance. The options market is also showing a neutral stance, with risk reversals close to flat.
Fundamental Valuation Shows CAD Undervalued
Scotiabank’s fair value estimate for USD/CAD is currently 1.3744, indicating the CAD is significantly undervalued at current levels.
Technical Outlook: Consolidation Near Key Levels
USD/CAD is consolidating around the 61.8% retracement level of the September 2024 – February 2025 rally at 1.3944. Key technical levels to watch include:
- Resistance: 200-day moving average at 1.3978, just below the key 1.4000 psychological level
- Support: A drop below 1.3900 could target the 50-day moving average at 1.3835
Near-Term Range
Analysts expect USD/CAD to remain range-bound between 1.3920 and 1.3980 in the short term.
