USD/CAD: Oversold condition in the USD is developing – Scotiabank
The Canadian Dollar (CAD) is little changed on the session, leaving spot pressed back up against yesterday’s intraday low around 1.3468, Scotiabank’s Chief FX Strategist Shaun Osborne notes
CAD holds gains in upper 1.34s
“While factors continue to shift favourably for the CAD in broad terms, spot is trading further below our fair value estimate (1.3529) today. General USD weakness accounts for some of the discrepancy but position adjustment (CAD short covering) is also a likely driver of the CAD’s buoyancy at the moment.”
“Friday’s CFTC data reflected only a mild reduction in the recent build-up of (hefty) CAD shorting activity in the week through last Tuesday. Spot retains a weak technical undertone.
“Steady losses over the past four weeks have pushed the USD back to 1.3475 retracement support (61.8% of the 2024 move up) and trend strength oscillators are aligned bearishly across the intraday, daily and weekly studies. This tilts risks towards more USD weakness and suggests limited scope for USD rebounds. Oscillators are warning that an oversold condition in the USD is developing, however.”
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