USD/CAD advanced strongly last week to reach the 1.26 area before turning lower Friday. Economists at Scotiabank expect the pair to move downward over the next few months to the 1.2100/50 region.

Firm short-term support seen at 1.2475/85

“Trend signals are mixed across various timeframes which rather suggests choppy range trade will persist, albeit with a downward bias from here.”

“We look for support around 1.2500 in the short run while firmer support lies just below this point at 1.2475/85 (minor high/low and the 200-day MA).” 

“More broadly, we think the USD’s rebound equates to an effective retest (and failure against) October’s bearish USD breakdown. This keeps the broader technical focus on a push towards 1.2100/50 in the next few months.”