USD/CAD losses have extended well below trend support at 1.2575 off of last summer’s low now. Economists at Scotiabank think the overall backdrop for the CAD is bullish and forecast the USD/CAD pair at 1.20 in the second half of the year.

Slide to extend to the 1.24 zone

“With equity markets more comfortable – for now – with the global risk backdrop, we expect fundamental drivers to support a stronger CAD in the coming weeks.”

“We think USD/CAD should decline to 1.2400/50 fairly quickly.”

“We look for USD/CAD resistance around 1.2575/1.2625 and anticipate limited scope for counter-trend corrections in the USD while the broader risk backdrop remains relatively friendly.”

“Our forecast for USD/CAD remains bearish; we expect USD/CAD to reach 1.21 in Q2 and look for USD/CAD to fall a little more (to 1.20) in Q3 and Q4.”