The Canadian Dollar (CAD) is little changed and clearly struggling to make headway through the 1.40 area—which spot has tested four times over the past three days, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Bullish trend studies are weakening

"Background factors driving the CAD (for example spreads, risk appetite) are tilting a little more constructively for the CAD this morning, pushing our fair value estimate to 1.3858. Trade uncertainty remains a major drag on CAD sentiment, however, and with no resolution in sight, the currency is liable to keep performing below its potential."

"Building Permits are out at 8.30ET but are liable to have little or no impact on the market. USD/CAD’s reversal from the mid-1.41 zone has halted around 1.40—noted “psychological” support and roughly the halfway point of the USD’s late October/early November rally (the 50% Fibonacci retracement sits at 1.4014)."

"The charts reflect solid support developing for the USD right at the 1.40 point but the lack of any major USD rebound is keeping the short-term technical picture tilted to the downside. Short-term trend momentum is bearish and broader, bullish trend studies are weakening. Support is 1.3890/00. A breakdown should see spot push lower to the 1.3900/50 range."