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Technicals point to a bearish stance on USD/CAD – Scotiabank

FXStreet (Edinburgh) - In the view of Currency Strategist at Scotiabank Eric Theoret, the outlook on the pair remains bearish in the short-term.

Key Quotes

“The stabilization of Fed expectations will likely shift the CAD risk and focus back to domestic developments, with key near term events including Monday’s election and Wednesday’s Bank of Canada (decision, statement, and MPR forecast update)”.

“We are biased to CAD weakness from current levels as we look to relative growth, central bank policy divergence, and soft commodity prices as key medium-term weights, and view recent gains as being driven by short-lived changes in sentiment and positioning”.

“The bearish momentum indicators are failing to reach new lows in tandem with USDCAD, providing for positive divergence (see chart). USDCAD appears unable to sustain its break below the 100 day MA (1.2917)”.

“Support is expected around 1.2850 and we see limited resistance ahead of the October 14 open at 1.3039”.

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