Bank of America Global Research discusses USD/CAD outlook and targets the pair at 1.32 by the end of Q1, and 1.25 by the end of the year.

"Investor concerns grew as pace of disinflation in the US appeared to be slowing down. As a result, the USD broadly rallied, after briefly testing the 1.32- handle vs CAD at beginning of February. For now, we are not yet convinced that market has shifted back to the 2022 high inflation regime," BofA notes.

"USD/CAD should have more room to fall if the broad disinflationary environment remains intact, so we would expect the current USD rally vs CAD to be temporary," BofA adds.