Break under 1.3500 would imply downside potential to 1.3425 – Scotiabank

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CAD needs to push below 1.35 against the USD to improve, economists at Scotiabank report.

Recent rally is running out of momentum

Monday’s snap higher off the intraday low for the USD retested the break under trend support that the market had established earlier in the session. Trend support-turned-resistance effectively held but easy gains for the USD remain a feature of this market and gives the clear impression that higher is the path of least resistance for USD/CAD. 

But there are signs from daily price action (after the USD still closed net lower on the day Monday) that the recent rally in the USD is running out of momentum. 

The 1.3575 zone is resistance and a potential double top; a break under 1.3500 triggers that signal and implies downside potential to 1.3425.