USD/CAD is drifting steadily lower after testing the 1.26 level late last week. The pair’s failure to push on through the 1.26 zone leaves it at risk of sliding below the 1.25 mark, economists at Scotiabank report.

Bullish outlook for the Canadian dollar

“The loonie looked somewhat misaligned with underlying fundamentals last week (even with crude oil drifting lower) from our point of view and investors appear to concur as levels near 1.26 draw out bargain hunters. We remain bullish on the CAD outlook.”

“The turn lower from the 1.26 zone is not particularly powerful on the charts at this point and we think a push under 1.2500 (40-day MA) will give the CAD rebound a little more momentum for a recovery to the mid/upper 1.24s.”