USD/CAD is steady on Thursday. Economists at Scotiabank analyze the pair’s outlook.

Short-term spot trends are somewhat mixed

Lower US rates and narrower US/Canada spreads are supportive of a somewhat firmer CAD in the near term and the CAD-positive turn in seasonal trends into Q2 remains something to keep in mind.

On the one hand, the USD’s tumble from the low 1.3600 area on Wednesday marks another, clear rejection of 1.3600 on the short-term chart which should really mean spot gravitates to retest the range low at 1.3420 at least. On the other, intraday patterns indicate a firm rebound in the USD from the intraday low which may mean the USD pushes back up to the low/ mid-1.3500 area before renewed selling pressure emerges. 

The 1.3600/1.3610 looks very firm resistance now and a low close on the week for the USD should drive more losses and a deeper correction of the USD’s Q1 strength in the weeks ahead.