USD/CAD: Loonie to rise against dollar in the medium term – CitiBank

Analysts at Citibank forecast the USD/CAD pair at 1.40 in a three months period and at 1.35 in six to twelve months. 

Key Quotes:

“We forecast a rebound in 3Q of this year with WTI prices eventually reaching $42 bbl by the end of the year. Additionally, the BoC and Canadian government have eased an extraordinary amount very quickly. Fiscal support is expected to come in at 6% of GDP. Eventually, this will allow the Canadian economy to rebound. We therefore forecast CAD upside vs. USD in the medium term.”

“Silver linings are already emerging: We are optimistic that the largest waves of newly unemployed workers have passed, as the increase in new applications for the Canada Emergency Response benefit has continued to moderate.”

“USDCAD looks like a double bottom within a triangle. Good resistance is at 1.4173-1.4181 with the potential double bottom neckline at 1.4265. Support may be found at 1.3851-1.3856.”