CIBC World Markets continues to look for USD/CAD to consolidate within the 1.0870-1.1250 range in the near-term.
“While longer-term charts indicate an eventual topside resolution for USD/CAD, this will likely take some time to play out and several factors still point to a near-term consolidative phase,” CIBC argues. Chief among these factors, according to CIBC, are:
1- Weekly oscillators indicate waning topside momentum with RSI exiting the overbought territory while a bearish MACD crossover appears imminent.
2- Short-CAD positioning is already heavily stretched (as indicated by the futures market).
3- The October-January impulse move higher was largely driven by a market that was pricing in BoC rate cuts and this no longer appears to be the case.
Near-term risk to this view:
“Next week’s FOMC meeting (March 19) along with the February CPI print (March 21) are the most obvious risks along. Additionally, we will be keeping a close eye on Governor Poloz’s appearance in Halifax next week (March 18),” CIBC clarifies.