USD/CAD stayed near the previous day’s range, while the Canadian dollar was slightly firmer in early trade. A softer US dollar and firmer risk appetite were reported as mildly supportive for the CAD in the short term.
Scotiabank’s fair value estimate for USD/CAD moved lower to 1.3424. The bank said the US dollar remains close to 1 standard deviation above its equilibrium estimate, which may cap further USD gains and keep a mild downward bias in spot.
Technical Picture Turning Lower
The pair’s overnight rebound stalled around 1.3625/30, described as former support at the 76.4% Fibonacci retracement of the US dollar’s March rally. Technical readings were described as bearish across intraday, daily and weekly studies.
With the move under retracement support, attention is on a possible return to the early March low at 1.3525. A group of prior lows and weekly trend support at 1.3520 was noted as potential support around 1.35.
The article stated it was produced using an AI tool and then reviewed by an editor.
Given the current setup, our bearish bias for USD/CAD holds as long as the pair remains below the 1.3630 resistance area. The underlying momentum suggests that any rallies in the US dollar will likely be short-lived. This presents an opportunity to position for a move lower in the coming weeks.
Positioning And Trade Ideas
This view is supported by recent Canadian economic data, with last Friday’s jobs report showing a net gain of 38,000 positions in April, comfortably beating expectations. This strength, coupled with WTI crude oil prices remaining firm above $80, reinforces the fundamental case for the Canadian dollar. We see this as a key reason our fair value model has shifted down toward 1.3424.
On the US side, last week’s inflation figures showed a slight cooling, which has tempered the market’s aggressive expectations for Federal Reserve policy that we saw through much of 2025. This divergence in economic surprises between the two countries helps reinforce a downward trajectory for the pair. The US dollar is also struggling for broad-based support as global risk appetite improves.
For derivative traders, this suggests that buying USD/CAD put options with strike prices around 1.3500 for June expiry could be an effective strategy. This allows traders to capitalize on a move toward the support target mentioned. A more conservative approach would be to implement a bear call spread, selling calls at the 1.3630 resistance level to collect premium while the pair drifts lower.
Those using futures or forwards could establish short positions while using the 1.3630 zone as a clear level for stop-loss orders. The initial target for taking profits should be the support area around 1.3520. A decisive break below this level would open the door for a more significant decline toward our fair value estimate.
