Key Moments
- The Canadian dollar is moderately outperforming the U.S. dollar, supported by strong risk sentiment and higher commodity prices.
- The Bank of Canada held its benchmark rate at 2.25%, signaling that policymakers consider the current stance appropriate for growth.
- Scotiabank strategists note that the CAD’s fair value has reached its strongest level since last June.
CAD Gains on Risk-On Mood and Commodity Strength
The Canadian dollar is gaining against the U.S. dollar, boosted by strong risk appetite and firmer commodity prices. As a result, the CAD has strengthened relative to the greenback in recent trading sessions.
Moreover, Scotiabank Chief FX Strategist Shaun Osborne and FX Strategist Eric Theoret say the CAD’s fair value estimate has improved. It now reflects its most favorable position since last June.
Bank of Canada Keeps Policy Rate Steady
The Bank of Canada left its key interest rate unchanged at 2.25%. Policymakers emphasized that this rate supports economic growth. Consequently, this decision reinforces the CAD’s recent strength.
Technical Picture: USD Faces Pressure
“The CAD continues to pressure major USD support in the mid-1.35 area, following a drop below long-term trend support at 1.3660 earlier this week,” the strategists note.
“Trend momentum signals remain bearish for the USD across short-, medium-, and long-term studies. Therefore, technical risks point to limited USD counter-trend gains.”
Key Levels and Technical Context
Recent price action highlights several key USD/CAD levels, according to Scotiabank’s analysis.
| Metric / Level | Detail |
|---|---|
| Major USD support area | Mid-1.35 region |
| Last June’s USD/CAD low | 1.3540 |
| Long-term trend support | 1.3660 (broken earlier this week) |
| BoC benchmark interest rate | 2.25% |
With momentum indicators remaining bearish for the USD, Scotiabank suggests that any rebounds against the CAD are likely to be limited. Therefore, traders should watch key support and resistance levels closely in the coming sessions.
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