The Canadian Dollar (CAD) is all but flat on the session. Markets may refocus on underlying fundamentals for a moment but broader geo-political tensions remain a risk for the CAD going forward, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/CAD pullback stalls after reaching targets

"Crude Oil prices are lower on the session (and Canadian crude spreads are weakening as pipeline capacity constraints re-emerge), offsetting the improvement in (equity) risk appetite. The CAD’s fair value estimate sits at 1.3794, near yesterday’s spot low and close enough to current pricing to suggest that there is limited upside potential in the CAD in the current environment, all else equal."

"CAD gains extended to the upper 1.37 area yesterday, effectively reaching our short-term technical target. The USD’s snap higher from the intraday low suggests the short-term decline in funds has stalled for now at least."

"Spot gains are struggling to extend through the low/mid-1.38s (200-day MA at 1.3837) and require an extension above 1.3845/50 to point to a return to the 1.39 zone. Support below 1.3780/90, remains 1.3750 and 1.3720."