CFD Trading Rate US Dollar vs Canadian Dollar (USDCAD)

• USD/CAD may find an immediate resistance area around the weekly high of 1.3588 and psychological level of 1.3600.
• A break above March’s high of 1.3614 could lead the pair to meet the major barrier of 1.3650.
• The immediate support appears at 1.3550, followed by the 50-day EMA at 1.3522.

USD/CAD extends its gains for the second consecutive session, trading higher around 1.3560 during the European session on Friday. The immediate barrier appears at a weekly high of 1.3588, followed by the psychological resistance at 1.3600 level.

A breakthrough above the psychological mark could prompt the USD/CAD pair to test March’s high of 1.3614 to approach the major barrier at the 1.3650 level.

The 14-day Relative Strength Index (RSI) is positioned above 50, suggesting bullish momentum. However, the Moving Average Convergence Divergence (MACD) suggests a tepid momentum.

The MACD line is above the centerline, indicating bullish momentum, but there is divergence below the signal line. Traders may await confirmation from the MACD, a lagging indicator, to determine the direction of the trend.

On the downside, the USD/CAD pair could find immediate support at 1.3550, followed by the 50-day Exponential Moving Average (EMA) at 1.3522 and the 23.6% Fibonacci retracement level of 1.3511.

A break below the latter could exert downward pressure on the USD/CAD pair to surpass the psychological level of 1.3500 to retest the weekly low at 1.3477 level.

USD/CAD: Daily Chart

• USD/CAD trades in positive territory for the second consecutive day around 1.3565 in Friday’s early European session. 
• Fed’s Barkin noted disinflation is likely to continue, but the pace of that remains unclear.
• Canada’s trade surplus widened to $1.39 billion in February from $0.61 billion in January, better than estimated. 

The USD/CAD pair gains traction near 1.3565 during the early European session on Friday. The rebound of the pair is bolstered by renewed US Dollar (USD) demand as the rising geopolitical tensions in the Middle East boost safe-haven flows. 

On Thursday, the Federal Reserve (Fed) Bank of Richmond President Thomas Barkin said disinflation is likely to continue, but the speed of that remains unclear. Barkin added that maintaining rates 'somewhat restrictive' will bring inflation back to target. Fed Chair Jerome Powell indicated that FOMC officials see it's appropriate to begin lowering policy rates if the economy develops as expected. 

The US labor market data for March will be due on Friday, which is likely to offer fresh insights into the Fed's outlook on interest rates. The highly-anticipated Nonfarm Payrolls (NFP) is estimated to show that the US economy added 200,000 jobs in March from a 275,000 increase in February. The Unemployment Rate is projected to remain steady at 3.9% in the same period. In the event that the US NFP data shows a strong-than-expected outcome, this could dampen June Fed rate cut expectations, providing some support to the Greenback and acting as a tailwind for the USD/CAD pair. 

On the Loonie front, Canada’s trade surplus increased to $1.39 billion in February from $0.61 billion in January, beating the estimation. This, in turn, lifts the Canadian Dollar (CAD). Additionally, the rise in oil prices due to the escalating tensions in the Middle East provides some support for the commodity-linked Loonie and might cap the upside of the USD/CAD pair. Market players will take more cues from the Canadian labour market data later in the day. 

• USD/CAD drifts lower to 1.3520 on the softer US Dollar on Thursday. 
• The US March ISM Services PMI came in weaker than expected, easing to 51.4 from 52.6 in February.
• Higher crude oil prices amid the fear of oil supply disruptions lift the commodity-linked Loonie.

The USD/CAD pair trades on a softer note near 1.3520 on Thursday during the early Asian trading hours. The rise of crude oil prices to their highest levels since October boost the commodity-linked Loonie. Additionally, the weaker-than-expected US ISM Services PMI data for March weighs on the Greenback and drags the USD/CAD pair lower. 

The Institute for Supply Management (ISM) showed on Wednesday that the US Services Purchasing Managers Index (PMI) for March dropped to 51.4 from 52.6 in February. This figure came in worse than the market expectation of 52.7. The US Dollar (USD) attracts some sellers following the downbeat figure. Meanwhile, Automatic Data Processing (ADP) reported that private sector employment in the US rose by 184,000 in March from the 155,000 increase (revised from 140,000) in February, above the market consensus of 148,000. 

Federal Reserve (Fed) Governor Adriana Kugler said on Wednesday that she believes inflation will slow gradually this year and pave the way for the Fed to cut interest rates. Furthermore, Fed Chair Jerome Powell reiterated that the policy rate is likely at its peak in the current cycle. Powell further stated that the FOMC policymakers see it as appropriate to begin cutting the policy rate, If the economy evolves as the Fed expects. These dovish comments exert further selling pressure on the USD and create a headwind for the USD/CAD pair. 

On the Loonie front, the geopolitical tensions in the Middle East raise the fear of oil supply disruptions and boost the Canadian Dollar (CAD). It’s worth noting that crude oil is one of the top five commodities exported from Canada and higher oil prices can positively affect Canada's economic performance and strengthen the CAD,

Looking ahead, market players will keep an eye on the US February Goods Trade Balance and weekly Initial Jobless Claims. Also, the Fed’s Barkin, Goolsbee, Kashkari, and Mester are set to speak on Thursday. 

• USD/CAD is steadily channeling higher on US Dollar strength. 
• Underneath price lie the three most important Moving Averages providing a safety net. 
• Price is marginally biased to continue rising within the bullish channel. 

USD/CAD is broadly channeling higher on the daily chart as the US Dollar (USD) steadily appreciates against the Canadian Dollar (CAD).

The range stretches from around the 1.3600s to the 1.3400s at the moment, although it is incrementally slanting higher. 

US Dollar versus Canadian Dollar: Daily chart 

USD/CAD is currently trading plum in the middle of the channel as it seesaws between tepid gains and losses. 

Given the bullish slant to the channel there is a slight but not significant bias for more upside and the pair could rise to the top of the channel at roughly 1.3675. 

Clustering just beneath price action around the 1.3500 level are the three most important Moving Averages – the 50, 100 and 200-day (Simple Moving Averages). These are key because they are not only followed by private investors but also institutional players.

Additionally, on the chart of USD/CAD it is notable how price action has respected the support cushion provided by these SMAs on several occasions during the formation of the channel. 

A move down from the current level in the mid 1.3500s will find support at the first SMA, the 50-day, at 1.3512, and probably bounce. Even if it penetrates below it is likely to find support from the 200-day SMA at 1.3502. 

If it gets through all three SMAs the bottom of the channel comes in with further support at roughly 1.3470. 

• USD/CAD could lose ground on stronger Crude prices on Wednesday.
• WTI price gains support due to concerns over a shortage of supply.
• US Dollar faces challenges after Fed officials made dovish comments.

USD/CAD seems to move in the negative direction for the second consecutive session, edging lower to near 1.3560 during the Asian session on Wednesday. The strength of the Crude oil prices contributes support for the Canadian Dollar (CAD), consequently, undermining the USD/CAD pair.

Western Texas Intermediate (WTI) oil price hovers around $84.80, near Wednesday's highest since October 2023. The increase in WTI price is supported by the weakening US Dollar and concerns over supply due to geopolitical uncertainties.

Moreover, the weaker US Dollar Index (DXY) applies downward pressure on the USD/CAD pair. DXY faces challenges after Federal Reserve (Fed) officials made dovish comments. Cleveland Fed President Loretta Mester expressed expectations of rate cuts later this year, while San Francisco Fed President Mary Daly deemed three rate cuts in 2024 "reasonable," pending further convincing evidence.

On Tuesday, US February JOLTS Job Openings rose to 8.756 million from the previous figure of 8.748 million, surpassing market expectations. Additionally, Factory Orders increased by 1.4% month-on-month in February from a 3.8% decline in the prior reading.

Market participants are anticipated to closely monitor Canadian Import and Export data on Thursday, along with labor data scheduled for release on Friday. In the United States (US), attention will be on the ADP Employment Change and ISM Services PMI data on Wednesday. Additionally, Federal Reserve Chairman Jerome Powell is set to deliver a speech on the US economic outlook at the Stanford Business, Government, and Society Forum in Stanford.

• USD/CAD trades lacklustre around 1.3580 as the focus shifts to US JOLTS Job Openings data.
• Traders pare Fed rate cut bets for June on strong US Manufacturing PMI.
• USD/CAD is on the verge of breaking out of the ascending triangle pattern.

The USD/CAD pair trades sideways around 1.3580 in Tuesday’s European session. The Loonie asset struggles to extend recovery above 1.3580 as investors look for fresh United States labor data to get cues about when the Federal Reserve (Fed) will start reducing interest rates.

This week, investors will focus on the US Nonfarm Payrolls (NFP) report for March, which will be published on Friday. In today’s session, investors will focus on the JOLTS Job Openings for February. US employers are anticipated to have posted fresh 8.74 million job openings, lower than 8.863 million in January.

Meanwhile, the market sentiment is risk-off as strong United States Manufacturing PMI for March forced traders to unwind their bets for the Fed to begin the rate-cut cycle from June. The US Institute of Supply Management (ISM) reported the Manufacturing PMI above the 50.0 threshold at 50.3 after shrinking for 16 months in a row.

S&P 500 futures have posted some losses in the European session. The US Dollar Index (DXY) trades close to four-month high slightly above 105.00.

The next move in the Canadian Dollar will be guided by the labor market data for March, which will be published on Friday. Canadian employers are expected to have recruited 25K job seekers.

USD/CAD is inch from breaking out of the Ascending Triangle pattern formed on a daily time. A breakout of a Triangle pattern could happen in either direction. The chart pattern exhibits a sharp volatility contraction. The upward-sloping border of the aforementioned pattern is placed from December 27 low at 1.3177 while horizontal resistance is plotted from December 7 high at 1.3620

The 20-day Exponential Moving Average (EMA) near 1.3520 remains sticky to spot prices, indicating a sideways trend.

The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among market participants.

The Loonie asset would observe a fresh upside if it breaks above December 7 high at 1.3620. This will drive the asset towards May 26 high at 1.3655, followed by the round-level resistance of 1.3700.

On the flip side, a downside move below February 22 low at 1.3441 would expose the asset to February 9 low at 1.3413. A breakdown below the latter would extend downside towards January 15 low at 1.3382.

USD/CAD daily chart

• USD/CAD gains positive traction for the second straight day, albeit lacks follow-through.
• Reduced bets for a June Fed rate cut lift the USD to a multi-week top and lend support.
• Bullish Crude Oil prices seem to underpin the Loonie and act as a headwind for the pair.

The USD/CAD pair attracts some buyers for the second straight day on Tuesday and looks to build on the overnight bounce from the 1.3515 region, or over a one-week low. Spot prices currently trade around the 1.3580 area and remain supported by some follow-through US Dollar (USD) buying, though bullish Crude Oil prices might cap any further gains.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, has advanced to its highest level since February 14 in the wake of doubts over whether the Federal Reserve (Fed) will cut interest rates three times this year. Investors trimmed their bets for a June Fed rate cut following the release of the upbeat US data, which showed that the manufacturing sector registered growth in March for the first time since September 2022. This remains supportive of elevated US Treasury bond yields, which, in turn, act as a tailwind for the buck and the USD/CAD pair.

Apart from this, the risk-off impulse turns out to be another factor benefitting the safe-haven Greenback. Meanwhile, Crude Oil prices stand tall near a five-month high touched on Monday amid signs of improved demand and the risk of a further escalation of tensions in the Middle East. This is seen underpinning the commodity-linked Loonie, which, in turn, might hold back traders from placing fresh bullish bets around the USD/CAD pair. Even from a technical perspective, the recent repeated failures to find acceptance above the 1.3600 mark warrant some caution.

Market participants now look forward to the US economic docket – featuring the release of JOLTS Job Openings and Factory Orders later during the early North American session. This, along with speeches by influential FOMC members, the US bond yields and the broader risk sentiment, should rive the USD demand and provide some impetus to the USD/CAD pair. Traders will further take cues from Oil price dynamics to grab short-term opportunities.

• USD/CAD finds cushion near 1.3500 as Oil prices drop on tighter supply concerns.
• The US Dollar moves higher while risk-sensitive currencies edge down amid uncertainty ahead of US data.
• The Loonie is expected to blow out of the ascending Triangle formation.

The USD/CAD pair discovers a temporary support near the psychological support of 1.3500 in the European session on Monday. The Loonie asset finds cushion as the Oil prices edge down after a three-day rally.

The appeal for the Oil prices remains buoyant on tighter supply concerns. OPEC pledges to extend production cuts by the June end. Also, Ukraine’s drone attacks on some Russian refineries have deepened supply concerns. It is worth noting that Canada is the leading exporter of oil to the United States and higher Oil prices strengthen the Canadian Dollar.

Meanwhile, the US Dollar rises slightly to 104.58 amid caution ahead of the United States Nonfarm Payrolls (NFP) and related labor market data this week. The market is experiencing asset-specific action as risk-perceived currencies are down while US equity futures have posted significant gains.

In today’s session, investors will focus on the United States ISM Manufacturing PMI data for March, which will be published at 14:00 GMT. The factory data is estimated to increase to 48.4 from 47.8 in February.

USD/CAD seems close to exploding the Ascending Triangle pattern formed on a daily time. The chart pattern exhibits a sharp volatility contraction. The upward-sloping border of the aforementioned pattern is placed from December 27 low at 1.3177 while horizontal resistance is plotted from December 7 high at 1.3620

The 20-day Exponential Moving Average (EMA) near 1.3520 remains stick to spot prices, indicating a consolidation ahead.

The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among investors.

The Loonie asset would observe a fresh upside if it breaks above December 7 high at 1.3620. This will drive the asset towards May 26 high at 1.3655, followed by the round-level resistance of 1.3700.

On the flip side, a downside move below February 22 low at 1.3441 would expose the asset to February 9 low at 1.3413. A breakdown below the latter would extend downside towards January 15 low at 1.3382.

USD/CAD daily chart

• USD/CAD drops to over a one-week low and is pressured by a combination of factors.
• Bullish Oil prices underpin the Loonie and weigh on the pair amid a softer Greenback.
• The US PCE Price Index keeps the June Fed rate cut on the table and weighs on the buck.

The USD/CAD pair extends its recent pullback from the 1.3610-1.3615 supply zone, or the YTD peak and remains under some selling pressure for the sixth successive day on Monday. The downfall, however, stalls ahead of the 1.3500 psychological mark, allowing spot prices to recover a few pips from over a one-week low touched during the Asian session.

Crude Oil prices advance to a five-month peak in the wake of concerns about tighter global supply – fuelled by OPEC+ cuts, attacks on Russian refineries and upbeat Chinese manufacturing data. This, in turn, underpins the commodity-linked Loonie, which, along with a modest US Dollar (USD) weakness, is seen exerting some downward pressure on the USD/CAD pair. In fact, OPEC+ pledged to extend production cuts to the end of June.

Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Friday that its Oil companies will focus on reducing output rather than exports in the second quarter. Moreover, Ukrainian drone attacks knocked out several Russian refineries, which is expected to reduce Russia's Oil exports. Furthermore, a pickup in China's manufacturing activity for the first time in six months adds to the optimism about a rise in fuel demand.

The US Dollar (USD), on the other hand, struggles to lure buyers amid expectations that the Federal Reserve (Fed) will begin its rate-cutting cycle in June, bolstered by the lack of any big surprises from the US Personal Consumption Expenditures (PCE) Price Index on Friday. This, along with the prevalent risk-on environment, is seen weighing on the safe-haven buck and contributing to the offered tone surrounding the USD/CAD pair.

Market participants now look forward to the release of the US ISM Manufacturing PMI for some impetus ahead of the Bank of Canada (BoC) Business Outlook Survey. This, along with Oil price dynamics, should contribute to producing short-term trading opportunities around the USD/CAD pair. The focus, however, will remain glued to the closely-watched monthly employment figures from the US and Canada, due on Friday.

• US February’s PCE figures largely met expectations.
• Next week, the focus will be on Nonfarm payrolls for markets to continue placing their bets on the next Fed decisions.
• Hot data may justify a delay in policy rate cuts beyond June.

The USD/CAD pair is currently trading around the 1.3543 level on Friday, reflecting minor losses after hitting a high of 1.3560 earlier in the session. While investors digest Personal Consumption Expenditures (PCE) figures, the market will turn its attention toward forthcoming employment-related figures that may add further nuance to the Federal Reserve's (Fed) posture on a probable policy rate delay.

The PCE Price Index, preferred by the Federal Reserve for gauging inflation in the US, saw a slight uptick to 2.5% annually in February, up from January's 2.4%, meeting expectations. The monthly increase of 0.3% was slightly below the forecasted 0.4%. Core PCE, which excludes food and energy, also rose by 2.8% annually, aligning with predictions, with a 0.3% monthly increase. The upward revision of January's core PCE figures suggests a continued trend of inflation, potentially prompting the Federal Reserve to maintain higher interest rates.

Future policy decisions will be influenced by incoming data, and the health of the labor market may potentially lead to adjustments in the timing and scale of rate cuts. Strong employment figures could prompt Fed policymakers to delay rate cuts beyond June and possibly reduce the number of cuts projected for 2024 from three to two, potentially bolstering the US Dollar. As for now, the strongest case scenario continues to be three rate cuts in 2024, starting in June.

USD/CAD technical analysis

On the daily chart, USD/CAD shows a somewhat stable trend. The Relative Strength Index (RSI) primarily maintains itself in positive territory, indicating that buying pressure slightly dominates the market. However, the Moving Average Convergence Divergence (MACD) histogram printed a new red bar which may imply a weak bullish momentum.

Analyzing the Simple Moving Average (SMA), it is seen that on a broader scale, despite showing a neutral outlook in the short term, the pair is above the 20,100,200-day SMAs. This suggests that the bulls command the overall trend, as long as the bulls defend the challenged 20-day average around the 1.3530 area.

USD/CAD daily chart

• USD/CAD holds its position after recovering daily losses on Friday.
• US Dollar strengthens on hawkish sentiment surrounding the Fed maintaining higher policy rates.
• Canadian Dollar received upward support from the higher WTI price.

USD/CAD hovers around 1.3540 during the Asian hours on Friday, showing signs of potentially ending its four-day losing streak. However, trading volumes are expected to be light due to Good Friday. The US Dollar's (USD) strength may be attributed to the hawkish sentiment surrounding the Federal Reserve's intention to maintain higher interest rates.

This shift in sentiment could be linked to recent robust economic data from the United States (US). Additionally, Federal Reserve Governor Christopher Waller's cautionary remarks, indicating no urgency to begin rate cuts, have tempered market expectations of three rate cuts in 2024.

US Gross Domestic Product (GDP) Annualized expanded by 3.4% in Q4, surpassing market expectations of remaining unchanged at a 3.2% increase. US Core Personal Consumption Expenditures (QoQ) for the same period came in at 2.0%, slightly below the expected and previous reading of 2.1%.

The Canadian Dollar (CAD) received a boost due to increased prospects of foreign currency inflows, fueled by the uptick in West Texas Intermediate (WTI) oil prices. The rise in Crude oil prices is linked to expectations that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will continue their production cuts.

Canada's Gross Domestic Product (MoM) expanded by 0.6% in January, surpassing the projected 0.4% increase. This indicates economic resilience and suggests a strengthening economic landscape. These figures have instilled confidence in Canada's economic outlook, dampening market expectations of immediate rate cuts by the Bank of Canada (BoC).

USD/CAD has edged slightly higher to retest the 1.3600+ area. Economists at Scotiabank analyze the pair’s outlook.

USD’s latest push above the 1.3600 area appears to have stalled out again

• USD/CAD pushes higher on USD strength after Fed officials advocate caution in cutting interest rates. 
• Oil remains bid despite higher inventories as official government figures moderate previous data. 
• BoC could turn dovish at the next meeting on lower inflation and negative growth outlook. 

USD/CAD continues channeling higher, up by almost a tenth of a percent and trading above 1.3600 on Thursday. The pair is benefiting from a general appreciation in the US Dollar (USD) on the back of expectations the Federal Reserve (Fed) will delay cutting interest rates, a key driver of FX markets. 

US Dollar versus Canadian Dollar: 4-hour chart

The outlook for Canada’s largest export Crude Oil, has hampered the Canadian Dollar (CAD) meanwhile, after a surprise rise in US stockpile data denoted flagging demand. Although WTI Oil is rising on Thursday – due to a more official source of stockpile data from the Energy Information Administration (EIA) moderating the initial data – Crude’s outlook remains uncertain. 

Fed officials caution against hasty rate cuts 

Overall stronger growth data and stickier-than-expected inflation in the US have led a series of Fed speakers to question whether the conditions are right for a rate cut in June. With interest rates now expected to remain higher for longer, the US Dollar (USD) has gained a boost, since higher interest rates tend to attract greater inflows of foreign capital. 

Policymakers in Canada have been less vocal about cutting interest rates and at the last Bank of Canada (BoC) meeting BoC Governor Tiff Macklem said it was still too early to consider cutting interest rates as more time was needed to ensure inflation had come down to the BoC’s 2.0% target. 

BoC may change tone

The divergence in policy stances between the two central banks would normally be expected to favor the Canadian Dollar over the US Dollar (bearish for USD/CAD), however, since Maclem spoke, Canadian inflation data for February has shown a fairly steep drop. 

The core Consumer Price Index, which is the metric most central banks favor for targeting price stability, fell to 2.1% YoY in February, from 2.4% in January, placing it just a tenth of a percent above the BoC’s target, according to data from Statistics Canada. 

Headline inflation also slowed to 2.8% from 2.9% and undershot expectations of 3.1%. The cooling inflation data suggests the BoC could shift their stance from its current “mute” setting at the next policy meeting on April 10. 

Apart from disinflation there may be other reasons why the BoC may feel a need to start cutting interest rates. Canada’s economy is in comparatively worse shape than the US’s and it could do with the panacea of lower interest rates to help stimulate activity. 

Canada’s  GDP growth rate is slower, it has higher unemployment and – in the words of BoC Assistant Deputy Governor Carolyn Rogers – suffers from “low productivity” and “poor levels of investment”. 

In addition, the BoC’s policy rate is lower at 5.0% than the fed funds rate of 5.25%-5.50%, a differential which mildly favors the US Dollar over the CAD.

• USD/CAD gains some positive traction on Thursday, though the upside remains capped.
• The Fed’s projected three rate cuts in 2024 caps the upside for the USD and the major.
• An uptick in Oil prices underpins the Loonie and contributes to keeping a lid on the pair.

The USD/CAD pair attracts some buyers during the Asian session on Thursday and for now, seems to have snapped a three-day losing streak, albeit lacks follow-through. Spot prices remain below the 1.3600 mark as traders look to important macro data from the US and Canada for some meaningful impetus.

Thursday's economic docket highlights the release of the monthly Canadian GDP report, along with the final US Q4 GDP print. Apart from this, the usual Initial Weekly Jobless Claims, Pending Home Sales and the revised Michigan Consumer Sentiment Index might influence the US Dollar (USD), which might produce short-term trading opportunities around the USD/CAD pair. The focus, however, remains glued to the US Personal Consumption Expenditures (PCE) Price Index on Friday.

In the meantime, the overnight hawkish remarks by Federal Reserve (Fed) Governor Christopher Waller cooled rate cut hopes and pushed the USD back closer to the monthly peak, lending some support to the USD/CAD pair. The Fed, however, projected a less restrictive policy going forward and indicated that it remains on track to cut interest rates by 75 basis points in 2024. This is holding back the USD bulls from placing aggressive bets and acting as a headwind for the currency pair.

Meanwhile, Crude Oil prices gain some follow-through traction in the wake of worries about tighter global supply amid lower Russian production. Furthermore, the Israel-Hamas conflict has shown little signs of de-escalation, which continues to fuel concerns about supply disruptions from the Middle East and lends additional support to the black liquid. This, in turn, is seen underpinning the commodity-linked Loonie and contributing to capping the upside for the USD/CAD pair.

• USD/CAD could gain grounds on risk aversion ahead of US PCE due on Friday.
• WTI oil price depreciates as the API Weekly Crude Oil Stock increased.
• The expectations of the US Fed initiating rate cuts could weaken the US Dollar.

USD/CAD halts its two-day losing streak, edging higher to near 1.3590 during the Asian session on Wednesday. The US Dollar (USD) is exhibiting strength, while lower Crude oil prices are contributing to downward pressure on the Canadian Dollar (CAD). This dynamic is bolstering the USD/CAD pair.

Western Texas Intermediate (WTI) oil price edges lower to near $80.70, by the press time. This decline in WTI price is attributed to the increase in API Weekly Crude Oil Stock for the week ending on March 22, with 9.337 million barrels against the previous decrease of 1.519 million barrels.

Bank of Canada (BoC) Senior Deputy Governor Carolyn Rogers has cautioned about Canada's low productivity resulting from inadequate investment, competition, and the underutilization of skills among new Canadians. Additionally, Rogers has highlighted concerns that the current inflation situation could pose a more significant threat than it has in recent decades.

The US Dollar Index (DXY) experienced its second consecutive day of gains amid a risk-off sentiment, driven by anticipation surrounding the upcoming release of US Personal Consumption Expenditures (PCE) scheduled for Friday. However, the decline in US Treasury yields may be attributed to the expectations surrounding the US Federal Reserve (Fed) regarding potential rate cuts. This sentiment could potentially limit the advances of the US Dollar.

Atlanta Fed President Raphael Bostic has expressed his expectation for just one rate cut this year, cautioning against reducing rates prematurely due to the potential for increased disruption. On the other hand, Chicago Fed President Austan Goolsbee aligns with the majority of the board, anticipating three cuts.

• USD/CAD drops to 1.3550 as the Fed’s belief that the underlying story of inflation easing is intact weighs on the US Dollar.
• The US Durable Goods Orders remained stronger than expected in February.
• BoC Rogers worries about Canada’s low productivity.

The USD/CAD pair falls to 1.3550 in the early American session on Tuesday. The Loonie asset faces pressure as the US Dollar drops on firm expectations that the Federal Reserve (Fed) will start reducing interest rates from the June meeting.

The Fed’s confidence in the fundamental story of inflation—that it will return to the 2% target despite hot readings in January and February—has boosted expectations for rate cuts in June. This has improved market sentiment, which has strengthened demand for risk-sensitive assets.

The S&P 500 opens on a positive note, portraying an increase in market participants' risk appetite. The US Dollar Index (DXY) falls to 104.15 from its monthly high of 104.50 despite upbeat US Durable Goods Orders for February. The US Census Bureau reported that orders for Durable Goods rose by 1.4% against expectations of 1.3%.

The Census Bureau said an increase in primary metals, transportation equipment, and machinery drove higher fresh durable goods orders. Higher spending in factories indicates a revival of the manufacturing sector, which has remained a main laggard due to the Federal Reserve's hefty rate hikes in more than two years.

This week, investors will keenly focus on the US core Personal Consumption Expenditure price index (PCE) data for February, which will be published on Friday. Fed’s preferred inflation measure will provide fresh cues about when the central bank will start reducing interest rates.

Meanwhile, the Canadian Dollar could face selling pressure as Bank of Canada (BoC) Senior Deputy Governor Carolyn Rogers has depicted vulnerable economic prospects. BoC Rogers warned about Canada’s low productivity due to a lack of investment, competition, and the inability of new Canadians to use their skills.

Carolyn Rogers also warned that the current inflation situation could be a bigger threat than it has been over the past few decades.

USD/CAD drifts a little lower. Economists at Scotiabank analyze the pair’s outlook.

Resistance is seen at 1.3600/1.3610

See – EUR/USD: Move above 1.0872 liable to spur additional gains to 1.0900+ – Scotiabank

• USD/CAD is moving lower within an ascending channel after almost touching the highs. 
• The MACD has crossed its signal line, giving a sell signal. 
• Heavy support lies at 1.3500 from a confluence of major moving averages. 

USD/CAD is in a steady short-term uptrend, with the exchange rate rising within an ascending channel. 

The pair recently reached the vicinity of the upper borderline of the channel before rolling over and beginning a decline. Its descent continues. 

US Dollar to Canadian Dollar: 4-hour chart

The reversal lower is supported by a bearish crossover of the Moving Average Convergence/ Divergence (MACD) indicator, providing a corresponding sell signal (circled). The MACD is especially reliable at marking turns within a range or channeling market environment. 

Despite the strength of the latest up leg and the overall bullish bias, price is moving lower as bears take over. 

US Dollar to Canadian Dollar: Daily chart

It is quite possible USD/CAD will continue falling to a confluence of two major moving averages – the 50-day and 100-day Simple Moving Averages (SMA) situated at around 1.3500. 

• USD/CAD faced challenges due to lower US Treasury yields on Tuesday.
• The lower WTI price could contribute to pressure on the Canadian Dollar.
• Greenback could struggle on market expectations of the Fed commencing an easing cycle.

USD/CAD trims intraday losses but remains in the negative zone, which could be attributed to an improved US Dollar (USD). The USD/CAD pair edges lower to 1.3580 during the Asian trading hours on Tuesday.

Additionally, the decline in Crude oil prices could have provided pressure to undermine the Canadian Dollar (CAD), reinforcing the USD/CAD pair. West Texas Intermediate (WTI) oil price edges lower to near $81.70 per barrel, by the press time. However, oil prices strengthened after the United States Energy Information Administration (EIA)increased its forecast prices for Crude oil and petroleum products for the remainder of 2024.

Moreover, the Canadian Dollar (CAD) encountered downward pressure following indications from the Bank of Canada (BoC) of possible rate cuts in 2024, as revealed in its latest meeting minutes. Deputy Governor Toni Gravelle reiterated the central bank's commitment to completing quantitative tightening by 2025, underscoring its sustainability amid incremental interest rate decreases. Investors are likely to await the release of Canadian Gross Domestic Product (GDP) data for January, scheduled for Thursday, which could further impact market sentiment.

The US Dollar Index (DXY) attempts to retrace its recent losses, inching higher to near 104.20, by the press time. However, the decline in the US Treasury yields, which could have put pressure on the US Dollar. Market sentiment is leaning towards expectations of the Federal Reserve (Fed) commencing an easing cycle, with speculations pointing towards a potential start in June. Traders will likely watch Consumer Confidence for February on Tuesday.

Atlanta Fed President Raphael Bostic anticipates only one rate cut this year, emphasizing the potential for increased disruption if rates are reduced prematurely. Conversely, Chicago Fed President Austan Goolsbee aligns with the majority of the board, foreseeing three cuts. However, Goolsbee emphasizes the importance of additional evidence showing a decline in inflation before advocating for rate cuts.