The Canadian Dollar has underperformed its G10 peers despite a weakening US Dollar and recent improvements in Canadian economic data relative to the United States, according to Scotiabank currency strategists Shaun Osborne and Eric Theoret. The loonie’s lag presents a potential opportunity as technical indicators now suggest bullish momentum building against the greenback.
While the broader currency market has seen G10 currencies gain ground amid USD softness, CAD has failed to capitalize on this trend until now. The currency analysts point to emerging positive signals that could trigger a catch-up move for the Canadian Dollar. Canadian economic data surprises have been trending more favorably compared to US releases, creating fundamental support for a potential rally.
The technical setup combined with improving relative economic performance suggests the CAD may be positioned for gains against the USD in the near term, particularly as traders reassess currency positioning.
FXnCO Insight
Traders should monitor USD/CAD for potential short opportunities as the loonie’s technical setup and improving data dynamics align for a possible breakout after recent underperformance.
Source: FXStreet