USD/CAD traded briefly on a 1.37 handle earlier for the first time since October, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Trend signals remain bearishly aligned

"Broader USD weakness is helping lift the CAD tone but the CAD finds itself at the foot of the overnight performance table, with a gain of just 0.25%, well below the advances seen among the core majors on the day. The CAD will certainly be able to take advantage of a generally weaker USD but weak global growth prospects will weigh on commodity prices (crude is down again today) and yield spreads over the USD remain wide."

"Both are an impediment to a stronger CAD performance. USD/CAD fair value is estimated at 1.3870 today. Intraday price signals indicate some better buying interest has developing for USDCAD below 1.38 but the broader trend in funds is weaker and the risk of a new, lower range developing is growing."

"The loss of support in the 1.3950/00 zone—the top of the new range perhaps—targets additional USD losses to 1.3745/0 (76.4% retracement of the USD’s late 2024/early 2025 rally). Losses could extend back to the September/October low at 1.3420 for a full retracement. Trend signals remain bearishly aligned across short-, medium– and long-term DMI studies."

Source: Fxstreet