The Canadian Dollar (CAD) has leaked steadily lower so far this week, extending its post-Christmas slide to the upper 1.38s, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/CAD tests upper 1.38s resistance zone

"Soft crude trends (up a little today, however) and soft risk appetite overnight account for the dip in the CAD’s form, along with the broader rebound in the USD. Other factors (spreads) remain more CAD-supportive but spot is trading a little further above (our) fair value estimate of 1.3826 this morning."

"Spot gains have extended a bit more than we expected at the start of the week to reach noted resistance in the upper 1.38s (50% retracement of the Nov/Dec USD decline, a major low from late Oct). USD gains should stall here in the short run at least."

"The USD advance has cleared the 200-day MA, however, and trend momentum signals are shifting USD-bullish on the short-term studies. Another push higher that establishes the USD above 1.39 may see USD extend to 1.3950/00. Support is 1.3810/20."