USD/CAD: attempting the 1.22 handle but 1.2220 is a strong resistance ahead

Currently, USD/CAD is trading at 1.2196, up 0.08% on the day, having posted a daily high at 1.2222 and low at 1.2131.

USD/CAD has given back its gains made through 1.22 the figure but is only descending as far as a few pips below the handle while the dollar maintains its form across the board. WTI is holding its own but making for a double top despite higher highs today meeting a key psychological resistance at the half way mark of the $49 handle.

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Analysts at Scotiabank explained that given the low expectations for a Fed rate hike by year-end, the biggest risk of the CAD perhaps in the next few days is the run of US data just around the corner. "Strong data which lifts Fed rate hike expectations will help boost USD/CAD modestly at least. Note that our fair value estimate for USD/CAD remains below the market, however, and suggests equilibrium around 1.2026 currently," the analysts explained.

USD/CAD levels

The analysts at Scotiabank explained that clearer range parameters suggest the USD is vulnerable to renewed softness below 1.2090 now. "We favour fading USD gains," the analysts said. On a continuation lower, 1.2063 was the recent 28mth low for USD/CAD after the BoC hiked last week. To the upside, 1.2220/44 guards 1.2335 and 1.2444 double bottom lows (28th Aug).