This pair has carved a near-term bottom and suggests a surge back to 1.27 (currently trading at 1.25). The dynamic behind the sharp recent drop wasn’t only Canadian dollar risk premium unwind from NAFTA talks but also massive oil rally from recent turmoil in Syria. As Canadian dollar follows oil prices we saw an overly sharp drop in this pair.
We see oil long covering to drop prices. Canadian dollar bulls to halt further buying prior to BOC rate statement and 20th of April Fridays retail sales data. Inline with that view technicals suggest a climb back to 1.27 area on USDCAD and a drop back to at least 83.50 on CADJPY, currently trading above 84.00.