The Canadian Dollar (CAD) is modestly higher against a mostly weaker US Dollar (USD) but spot is holding within recent ranges, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/CAD stalls near 1.39, double top risk builds

"The CAD has edged off the lows seen last week as market’s digest PM Carney’s trade maneuvers but sluggish terms of trade and some widening on short-term US/Canada spreads limit the CAD’s ability to improve significantly now. Spot fair value is estimated at 1.3865 this morning."

"USD/CAD chart patterns reflect a stall in the USD’s new year rebound in the low 1.39 area. Price action turned neutral/bearish last Monday via a 'harami' candle and developments suggest a minor double top has formed over the past few sessions at 1.3925."

"A break under 1.3855 confirms the double top and targets a drop to 1.3780/90. A rebound back through 1.3925 would target gains to 1.3950/00."