Canadian Dollar: Consolidation around 1.40 level – Scotiabank

FXStreetOct 27, 2026 2:23 PM

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Scotiabank strategists Shaun Osborne and Eric Theoret report USD/CAD trading flat with the Canadian Dollar (CAD) underperforming other commodity currencies but gaining versus major peers. Sentiment toward CAD has improved as US–Canada 2-year spreads narrow, and fair value is estimated near current levels. Technically, they see USD/CAD consolidating around the key 1.40 area, with recent doji candles reinforcing a range-bound tone.

CAD sentiment improves but pair ranges

"The CAD is trading flat to the USD and showing relative underperformance against its growth-sensitive commodity currency peers while also seeing gains vs. the majors EUR, GBP, and JPY."

"Headlines released late Monday offered a fresh read on US/Canada trade talks, with PM Carney hinting to an intensification’ and modest progress as US officials confirmed the apparent improvement in the overall tenor of negotiations."

"The recent recovery in sentiment has been notable, as the options market has almost completely faded the premium for protection against CAD weakness."

"The shift in sentiment has followed the narrowing in US-Canada 2Y spreads, offering a powerful combination of support. Our FV estimate for USD/CAD is at 1.4020."

"Bearish/neutral – the latest decline in USD/CAD has turned to consolidation around key technical levels, most importantly the psychologically significant 1.40 level, as well as the 50 day MA at 1.4018. The pair of opposing doji candles on Friday and Monday has added to the consolidative price action."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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