Scotiabank strategists Shaun Osborne and Eric Theoret highlight renewed Canadian Dollar (CAD) weakness as softer Oil prices and geopolitical concerns push USD/CAD to new year-to-date highs. They describe a “heads I win, tails you lose” backdrop for the CAD, with the pair breaking above the March peak. Short-term technicals flag an overbought USD but still point toward a test of the 1.40–1.41 congestion area.

CAD pressured as Oil and risk weigh

"The CAD probed the 1.39 area yesterday around the Bank of Canada policy announcement but could not hold that advantage. While Governor Macklem sounded cautious on the policy outlook at the post-meeting press conference, CAD losses only really started to pick up in late afternoon trade once markets started to fret about more US strikes on Iran. "

"Now, though softer oil prices appear to be the primary driver of CAD losses overnight, with the CAD selling off in line with the NOK as Brent and WTI prices dropped."

"It feels a bit “heads I win, tails you lose” for the CAD and this latest move leaves spot trading at a new cycle high for the year and the USD at its best level since early December. Firmer stocks and a lower VIX might help steady the CAD but there’s not much love at all out there for the CAD right now."

"Neutral/bearish—USD-negative price signals that developed earlier in the week failed to provide any lift for the CAD and spot gains through the March peak at 1.3967 leave the CAD looking vulnerable to more losses again."

"The USD is overbought but trend momentum remains bullish for a push into the 1.40-1.41 congestion range from Q4. Support is 1.3900. "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)