The Canadian Dollar remains weak against the US Dollar as USD\/CAD moves higher, despite firm Canadian yields, steady crude prices, and a stable risk backdrop. Scotiabank\u2019s fair value estimate for USD\/CAD has edged back towards 1.35, at 1.3504.<\/p>\n
The bank says USD\/CAD looks overvalued again, returning towards the wider gap last seen in April. It also notes the pair is testing the 50% retracement level of the March 31 to May 1 fall from 1.3967 to 1.3550, which sits at 1.3758.<\/p>\n
Scotiabank flags the risk of further near-term gains in USD\/CAD as short-term trends turn more supportive for the US Dollar. It expects resistance near 1.3800 to 1.3815, with stronger resistance in the upper 1.38s to low 1.39s.<\/p>\n
Support is placed at 1.3715 to 1.3725. The article states it was produced using an AI tool and checked by an editor.<\/p>\n
We are seeing a familiar defensive tone in the Canadian dollar, with the USD\/CAD pair pushing higher. Last year, we noted the US dollar’s overvaluation when the fair value estimate was near 1.35, a situation that is re-emerging today. This trend persists even when underlying factors should be supporting the loonie.<\/p>\n
This upward pressure on USD\/CAD is now being amplified by a widening policy divergence between the central banks. Recent Statistics Canada data shows April CPI cooling to 2.5%, increasing odds of a Bank of Canada rate cut in July, while stubborn US inflation figures keep the Federal Reserve on hold. The current two-year yield spread between US and Canadian bonds has consequently widened to over 60 basis points in favor of the US dollar.<\/p>\n
Given the short-term bullish trend for the US dollar, buying USD\/CAD call options with strike prices above the current support of 1.3725 could be a prudent move. These options would allow traders to profit from a potential squeeze higher towards the 1.3800\/15 resistance area we identified last year. The limited upfront cost of an option provides upside exposure while defining downside risk.<\/p>\n
For a more cost-effective strategy, consider a bull call spread by buying a call at a lower strike and selling another at a higher strike, such as 1.3850. This can capitalize on the move toward the upper resistance levels while reducing the premium paid. It aligns with the view that a firmer technical block on dollar gains will likely emerge in the upper 1.38s.<\/p>\n
A key factor that has shifted since our analysis in 2025 is the price of crude oil, which is no longer as firm a support for the loonie. WTI crude has recently dipped below $78 a barrel amid concerns about global demand, removing a significant pillar of strength for the Canadian dollar. This makes the CAD even more vulnerable to a stronger US dollar.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canadian Dollar weakens as USD\/CAD rises; Scotiabank sees pair overvalued, key resistance near 1.38, support 1.3720.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[9],"class_list":["post-53659","post","type-post","status-publish","format-standard","hentry","category-live-updates","tag-dollar"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=53659"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53659\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=53659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=53659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=53659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}