USD/CAD Bear Trend Stays Intact Below 1.3645, Says Scotiabank

Scotiabank analysts have reiterated that the bearish trend in the USD/CAD currency pair remains intact as long as the exchange rate stays below the key resistance level of 1.3645. The assessment, based on recent technical analysis, provides traders with a clear benchmark for evaluating the pair’s short-to-medium-term direction.

Technical Outlook and Key Levels

The 1.3645 level represents a significant resistance point that has capped upside attempts in recent sessions. According to Scotiabank’s analysis, a sustained move below this threshold confirms the prevailing bearish momentum. The pair has been under pressure amid shifting expectations for monetary policy divergence between the Federal Reserve and the Bank of Canada.

From a technical perspective, the Canadian dollar has shown resilience, supported by relatively stable crude oil prices and a cautious tone from the Bank of Canada regarding further rate cuts. Scotiabank’s strategists note that the onus remains on the USD side to break higher, which appears unlikely without a fundamental catalyst.

Broader Market Context

The USD/CAD pair is heavily influenced by commodity price movements, particularly oil, given Canada’s status as a major exporter. Recent fluctuations in West Texas Intermediate (WTI) crude have contributed to the pair’s choppy trading range. Additionally, interest rate differentials between the U.S. and Canada continue to play a pivotal role. While the Fed has signaled a cautious approach to easing, the Bank of Canada has already begun cutting rates, creating a complex backdrop for the loonie.

Market participants are now closely watching upcoming economic data releases, including Canadian GDP figures and U.S. employment reports, for further directional cues. Any surprise in these numbers could trigger a break of the 1.3645 level, either confirming the bearish trend or signaling a potential reversal.

Implications for Forex Traders

For forex traders, the 1.3645 level serves as a critical decision point. A sustained move below this area reinforces a bearish bias, with potential targets around 1.3500 and lower. Conversely, a decisive break above 1.3645 would invalidate the current bearish outlook and open the door for a move toward 1.3750. Risk management remains essential, as the pair is prone to sudden volatility around key economic releases.

Conclusion

Scotiabank’s analysis provides a clear technical framework for the USD/CAD pair, emphasizing the importance of the 1.3645 resistance level. As long as the pair remains below this threshold, the bearish trend is considered intact. Traders should monitor upcoming economic data and central bank commentary for confirmation or a potential shift in momentum.

FAQs

Q1: What does it mean when Scotiabank says the USD/CAD bear trend is intact below 1.3645?
It means that as long as the USD/CAD exchange rate stays below 1.3645, the overall downward trend is expected to continue. This level acts as a resistance that the pair must break above to signal a potential trend reversal.

Q2: Why is the 1.3645 level important for USD/CAD?
The 1.3645 level is identified by Scotiabank as a key technical resistance point. It has historically capped upward moves and is used by traders to gauge the strength of the current bearish momentum.

Q3: How can traders use this information?
Traders can use the 1.3645 level as a reference for setting stop-losses, identifying entry points, and managing risk. A sustained move below this level supports bearish positions, while a break above could signal a shift to a bullish bias.