Corrective gains to the mid-1.35s remain a likelihood in the next few weeks – Scotiabank

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USD/CAD’s rebound tested the mid-1.34 resistance area on Thursday. Economists at Scotiabank analyze the pair’s outlook.

Trend dynamics remain USD-bullish

Trend dynamics remain USD-bullish, with steady progress in the USD since late December backed by some strengthening in the intraday and daily DMIs. 

USD gains peaked on Thursday near the 38.2% Fib retracement resistance at 1.3453 (from the Q4 USD sell-off) and the mid-1.34 area may remain firm resistance in the near-term (note the 40-DMA at 1.3449). 

USD support should remain firm on dips to the upper 1.33s. More corrective USD gains to the mid-1.35s remain a likelihood in the next few weeks.