USD/CAD remains in a bullish trend, but recent price action has been soft. Economists at Rabobank expect the pair to head gradually higher over the coming months towards 1.37.
More downward pressure in the short term
“The technical picture points to more downward pressure in the short term, but we expect strong support at 1.3230 and are of the view that the 1.32 handle will hold.”
“As we move into the middle of the year, we see room for USD strength to re-emerge as the market prices out potential Fed rate cuts. Although we expect a true consumer-driven recession south of the border, inflation will remain well above target, and unemployment is likely to rise slower than is usually seen heading at that stage of the cycle.”
“Our expectation of a USD retracement means we see USD/CAD trading around the 1.37 level towards the end of 2023. However, we expect price action to be a rocky ride and see room for USD/CAD implied to head higher.”