The Canadian Dollar (CAD) has shown some strength in the recent session, despite being down 0.6% against the US Dollar (USD) for the week. However, it is still performing better than its commodity peers such as the Australian Dollar (AUD) and New Zealand Dollar (NZD), which are both down nearly 2%. According to Shaun Osborne, Chief FX Strategist at Scotiabank, the CAD is holding its ground for now.
Currently, the USD is moving towards the 1.3845 hurdle, with the recent trading range for the CAD holding steady. Despite this week’s gains barely surpassing the April peak of 1.3846, there is a possibility for the CAD to shift towards the lower end of recent ranges if certain factors, such as spreads and stocks, become more favorable. Osborne predicts that the CAD will continue to have a soft tone and stay close to its recent lows against the USD in the near future.
Although there was a slight drift from the intraday high for the USD and a modest gain for the CAD, it seems that the immediate risk of a further rise in the USD has decreased. While the CAD still has some work to do to show signs of improvement in its technical tone, there may be a small recovery for the CAD in the short term. It is important to note that there was a bearish outside range signal on the 6-hour chart yesterday, indicating a potential shift in momentum. Short-term support for USDCAD is at 1.3795, with resistance at 1.3845/50.
The recent movements in the CAD suggest that there could be a turnaround in the near future, as the USD rally appears to be unsustainable based on intraday and daily RSI oscillators. If the CAD can break through the resistance levels and strengthen its technical tone, there may be room for further improvement against the USD. With support levels in place and signs of a potential recovery, the CAD could see a modest uptick in the coming days.
In conclusion, the CAD has shown resilience in the face of a stronger USD, holding its ground and even showing signs of potential recovery. With key support and resistance levels in place, there is a possibility for the CAD to strengthen in the short term. Despite challenges in the market, the CAD remains a better performer compared to its commodity peers, indicating potential for growth in the future. As the market dynamics continue to evolve, it will be crucial to monitor the CAD’s performance against the USD and other currencies to gauge its strength in the forex market.
