Three days of USD/CAD gains have brought Scotiabank’s resistance levels into focus, while its broader outlook favours the Canadian dollar.
The US Dollar to Canadian Dollar (USD/CAD) exchange rate closed Friday at 1.3871, up 0.26% and extending its advance to a third session.
That puts the pair inside Scotiabank’s first resistance area, where the bank expects moderate dollar gains to attract selling interest.
Dollar to Canadian Dollar (USD/CAD): 1.38712 (+0.26%)
Euro to Canadian Dollar (EUR/CAD): 1.608928 (+0.16%)
“We spot moderate resistance in the mid/upper 1.38s and firmer resistance in the low/mid 1.39 zone.”
The bank rates the short-term technical picture neutral, allowing for further dollar gains, but retains a bearish view over longer horizons.
“Trend momentum remains USD-bearish across the medium- and long-term oscillator studies, meaning that moderate USD gains are likely to draw selling interest.”
The recent rise also follows two months of declines, with USD/CAD falling 1.36% in July and 1.15% in August.
Oil weakness weighs on the Canadian dollar
Oil had helped support the Canadian dollar earlier in the week.
Scotiabank linked its subsequent softness to crude: “The CAD is a little softer on the session, reflecting the slump in oil prices from yesterday’s peak.”
The IEA’s September assessment cut its forecasts for both oil demand and supply, with a recovery in Gulf production pushed into 2027.
At the time of its assessment, Scotiabank also noted: “Front-end US/Canada spreads have held quite stable in the past few days, despite the elevated focus on US rate policy, which should provide some anchoring for the CAD in the short run.”
For a renewed USD/CAD decline, the bank identifies support at 1.3715-1.3735, followed by the 1.3500-1.3550 region.
A sustained move through the low-to-mid 1.39s would instead challenge its view that dollar rallies will attract sellers.
Our currency coverage draws on live market data, official economic releases and published bank research.
