*The median forecast of more than 30 strategists was for the Canadian dollar to rise a further 0.6% over the next three months to 1.25 per US dollar, or 80 US cents.
* "We expect the Canadian dollar to be a general outperformer among the G10 over the coming year," said Erik Nelson, a currency strategist at Wells Fargo in New York.
The Canadian dollar was trading 0.4pc lower at 1.2633 to the greenback, or 79.16 U.S. cents, having touched its weakest level since March 10 at 1.2646.
Canadian small business sentiment soared in March, data showed. The CFIB Business Barometer Index rose to 68.2 from 62.5 in February, its highest level in nearly 10 years.
The Bank of Canada is seeing evidence of investor activity in some Canadian housing markets and is concerned that "fear of missing out" may also be driving price gains, Deputy Governor Toni Gravelle told Reuters on Tuesday.
The price of oil, one of Canada's major exports, plunged as concerns over new pandemic curbs and slow vaccine rollouts in Europe added to oversupply uneasiness.
The rally in oil has been supportive of the Canadian dollar. Since the start of the year, the loonie has gained 0.7%, trailing just sterling and the Norwegian crown among G10 currencies.