USD/CAD has maintained a tight, sideways trading range around 1.25 this week. Economists at Scotiabank think the pair is set to move downward towards the October low around 1.22.

Bear trend remains deeply entrenched

“Short-term price action suggests firm USD support on dips in European trade which might tilt intraday risks towards a test of the low 1.25s early in our session. But we think the broader, bear trend remains deeply entrenched in this market and modest USD gains are likely to attract better USD selling pressure.” 

“Broader price patterns continue to reflect strong, longer run resistance in the low 1.26 zone and downside potential in the USD to the upper 1.22s – effectively a retest of the Oct low. A break below this point indicates scope for additional CAD gains in the medium term towards 1.20.”