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In view of FX Strategists at Scotiabank, the pair should face resistance in the 1.3050 region in the near term.

Key Quotes

“Sentiment is dominating in the context of higher U.S. yields and weighing on the CAD via wider interest rate differentials. The market tone is delivering added pressure as market participants consider ongoing trade tensions and the IMF’s latest downgrade to its global growth forecast. Domestic oil prices are weak and spreads to WTI/Brent are just shy of their recent record levels. Our FV estimate for USDCAD using spreads (2Y, 5Y) and Canada’s terms of trade index is currently just below 1.33″.

“Momentum indicators have just drifted into bullish territory and the DMI’s are confirming with a bullish alignment. USDCAD is threatening the psychologically important 1.3000 level just below the 50 day MA. We would anticipate additional near-term resistance around the 100 day MA just above 1.3050. Support is expected at 1.2950 and 1.2920″.