CFD Trading Rate US Dollar vs Canadian Dollar (USDCAD)

• USD/CAD extends its gains after stronger US Producer Price Index (PPI) data.
• US Core PPI remained at 2.0% YoY and rose by 0.3% MoM in February.
• Higher WTI price could provide support for the Canadian Dollar.

USD/CAD gains ground for the second successive session on Friday. Wednesday’s hotter-than-expected US Consumer Inflation data has reduced the likelihood of the Federal Reserve (Fed) cutting interest rates soon. This sentiment is further bolstered by Thursday’s Producer Inflation figures from the United States (US). As a result, the USD/CAD pair trades higher around 1.3540 at the time of this update.

The US Dollar Index (DXY) benefits from the hawkish sentiment surrounding the US Fed, which is considering prolonging its higher interest rates due to persistent inflationary pressures. US Treasury yields have increased in the previous four consecutive sessions, providing support to the US Dollar (USD). The DXY remains in the green zone around 103.40, with the 2-year and 10-year yields on US Treasury bonds correcting at 4.68% and 4.28%, respectively.

The US Core Producer Price Index (PPI) held steady with a 2.0% year-over-year increase in February, surpassing expectations which were set at 1.9%. The US PPI (YoY) experienced a 1.6% increase, exceeding both the expected 1.1% and the previous 1.0%.

US Retail Sales rose by 0.6% monthly, below the expected 0.8% in February, swinging from the previous decline of 1.1%. While Retail Sales Control Group improved to a flat 0.0%, compared to the previous decline of 0.3%. Traders will likely keep an eye on the preliminary US Michigan Consumer Sentiment Index for March, due to be released on Friday.

West Texas Intermediate (WTI) oil prices are on the rise for the third consecutive day, buoyed by signs of strong demand in the United States and an optimistic outlook for global consumption in 2024. This positive trend in Crude oil prices could offer support for the Canadian Dollar (CAD), as Canada is the largest oil exporter to the US. Consequently, this could limit the upside potential of the USD/CAD pair.

On Thursday, Canadian Manufacturing Sales showed a rebound to 0.2% in January, although it fell short of the forecasted 0.4%. Despite this, it marks a recovery from the previous month's decline of -1.1% (revised down from -0.7%). Investors will now turn their attention to Housing Starts and Wholesale Sales data scheduled for release on Friday.

The Loonie’s recent appreciation has been tepid considering the overall weakness of the US Dollar. In essence, the CAD has been the weakest of the strong over the past month. Economists at the National Bank of Canada analyze USD/CAD outlook.

Restrictive monetary policy in Canada can no longer be justified

• USD/CAD could test a nine-day EMA of 1.3497 and a psychological level of 1.3500.
• The major level of 1.3450 and the 38.2% Fibonacci retracement level of 1.3442 could act as key support levels.
• A break above the 1.3600 level could lead the pair to test March’s high of 1.3605.

USD/CAD retraces its recent losses from the previous session, edging upwards to near 1.3480 during Thursday's European session. The US Dollar (USD) receives support from higher US Treasury yields, likely influenced by recent data indicating sticky inflation in the United States (US).

The immediate resistance is at the nine-day Exponential Moving Average (EMA) at 1.3497, coinciding with the psychological level of 1.3500.

A breakout above the psychological level could provide upward support for the USD/CAD pair, with the next resistance at the major level of 1.3550. Further upside momentum may target the region around the psychological level of 1.3600, aligned with March’s high of 1.3605.

On the downside, the USD/CAD pair may encounter significant support around the major level of 1.3450, followed by the 38.2% Fibonacci retracement level at 1.3442. A breach below this level could exert downward pressure on the pair, potentially leading it toward the support zone near the previous week’s low of 1.3419 and the psychological level of 1.3400.

The technical analysis indicates mixed signals for the USD/CAD pair. The 14-day Relative Strength Index (RSI) is positioned below 50, suggesting bearish momentum. However, the Moving Average Convergence Divergence (MACD) suggests a potential momentum shift.

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.

USD/CAD: Daily Chart

• USD/CAD loses traction near 1.3468 on the softer USD. 
• The upbeat US CPI data might keep the Fed waiting until the summer before starting to cut rates.
• Markets believe the BoC will not move aggressively on interest rates. 
• Investors will focus on the Canadian Manufacturing Sales and the US Retail Sales, due on Thursday. 

The USD/CAD pair trades in negative territory for a second consecutive day during the early Asian session on Thursday. The US Dollar (USD) resumes its decline below the 103.00 mark and drags the pair lower. Investors await the US Retail Sales data on Thursday for fresh impetus, which is projected to rise 0.8% MoM in February. At press time, USD/CAD is trading at 1.3468, down 0.02% on the day. 

The hotter-than-expected US inflation data earlier this week might keep the Federal Reserve (Fed) on course to wait at least until the summer before starting to lower interest rates. The headline CPI rose 3.2% YoY from January’s reading of 3.1%, while the Core CPI ticked lower to 3.8% YoY from the previous reading of 3.9%. Market players will take more cues from US February Retail Sales data as it might influence the Fed’s next move in its March meeting scheduled for next week. The stronger report might convince the Fed to focus on more data and allow policymakers to avoid having to rush to cut rates, which might lift the US Dollar (USD) and create a tailwind for the USD/CAD pair. 

On the other hand, the Bank of Canada (BoC) left the interest rate unchanged earlier this month, as largely expected by the market. The BoC’s governor Tiff Macklem highlighted that lowering inflation close to target is the central bank’s priority. The markets anticipate that the BoC will not move aggressively or cut rates until after the Fed, which might be the upside potential for the Canadian Dollar (CAD) in the coming months.

Meanwhile, the rise in crude oil prices might boost the commodity-linked Loonie for the time being, as Canada is the largest oil exporter to the United States (US).

Moving on, the Canadian Manufacturing Sales is due on Thursday. On the US docket, traders will keep an eye on the US Retail Sales data for February, along with the Producer Price Index (PPI), Business Inventories, and usual weekly Initial Jobless Claims.

• USD/CAD could continue its winning streak on risk-off sentiment.
• US CPI YoY and MoM rose by 3.2% and 0.4%, respectively, in February.
• The higher Crude oil prices limit the losses of the Canadian Dollar.

USD/CAD could maintain its winning streak for the fourth consecutive session, with the pair trading higher around 1.3490 during the early European hours on Wednesday.

The US Dollar (USD) receives upward support from the prevailing market sentiment despite a potential for a rate cut by the Federal Reserve (Fed) in June, despite the release of upbeat Consumer Price Index (CPI) data on Tuesday.

According to the CME FedWatch Tool, the probability of a rate cut in March has decreased to 1.0%, while it stands at 15.6% for May. In June, the likelihood of a rate cut is estimated to be 66.6%.

In February, US CPI (YoY) increased by 3.2%, surpassing estimates of 3.1%. The monthly inflation met expectations at 0.4%, higher than the previously observed 0.3%. US Core CPI rose by 3.8% year-over-year, above the anticipated 3.7% but below the previous reading of 3.9%. The month-over-month figure remained steady at 0.4%, against the market expectations of 0.3%.

The rise in Crude oil prices may have provided upward support for the Canadian Dollar (CAD), thereby capping the upside potential of the USD/CAD pair. West Texas Intermediate (WTI) oil price edged higher to nearly $77.90 per barrel during the European hours at the time of writing.

Crude oil prices are anticipated to receive upward support due to a strong outlook for global demand. The Organization of the Petroleum Exporting Countries (OPEC) has maintained its forecast for relatively robust growth in global oil demand in 2024 and 2025.

The economic calendar for the Canadian Dollar does not contain high-impact data for the week. Attention will be on the US Core Producer Price Index (PPI) and Retail Sales data scheduled for release on Thursday.

• USD/CAD trades with a mild positive bias around 1.3492 in Wednesday’s early Asian session. 
• The upbeat US CPI inflation data for February might convince the Fed to wait until the summer before starting rate cuts. 
• Moody’s Analytics stated that the BoC is at risk of weakening the economy by not cutting interest rates sooner.

The USD/CAD pair posts modest gains below the 1.3500 mark during the early Asian session on Wednesday. The stronger-than-expected US inflation number weighs on market sentiment and provides some support for the pair. The US February Retail Sales will be the highlight for this week, which is projected to improve to 0.8% MoM. USD/CAD currently trades near 1.3492, adding 0.01% for the day.  

The US inflation, as measured by the Consumer Price Index (CPI), unexpectedly increased to 3.2% YoY in February, keeping the Federal Reserve (Fed) on course to wait at least until the summer before starting to cut interest rates. Additionally, the Core CPI, excluding volatile food and energy prices, rose 0.4% MoM and 3.8% YoY, stronger than the estimation. The February CPI inflation data will play an important role in the Fed’s rate forecast. Investors anticipate the US central bank to keep rates between 5.25% and 5.5% in its March meeting scheduled for next week. 

On the Loonie front, analysts are concerned about the economic slowdown in the Canadian economy. Moody’s Analytics stated that the Bank of Canada (BoC) is at risk of weakening the economy by not cutting interest rates sooner. Earlier this month, the BoC left the interest rate unchanged at 5% for the fifth consecutive meeting. The BoC governor Tiff Macklem said that core inflation remains a concern and emphasized that it was premature to talk about rate cuts.

Looking ahead, Canada’s Manufacturing Sales, Housing Starts, and Wholesale Sales for January will be published on Thursday. On the US docket, Retail Sales for February will be a closely watched event this week. This event could give a clear direction to the USD/CAD pair. 

USD/CAD edges slightly lower. Economists at Scotiabank analyze the pair’s outlook.

Firm resistance at 1.3510/1.3520 

• USD/CAD could test the major support of 1.3450 on Tuesday.
• Technical analysis suggests a momentum shift in the trend.
• The key resistance zone could appear around the psychological level of 1.3500 and a nine-day EMA of 1.3506.

USD/CAD extends its losses for the second session, edging lower to near 1.3470 during the European session on Tuesday. The cautious sentiment prevails ahead of the release of the Consumer Price Index (CPI) data from the United States (US).

The USD/CAD pair could find key support at the major level of 1.3450, followed by the 38.2% Fibonacci retracement level of 1.3442. A break below this level could put downward pressure on the pair to navigate the support region around the previous week’s low of 1.3419 and psychological level of 1.3400.

The technical analysis of the 14-day Relative Strength Index (RSI) is positioned below 50, suggesting bearish momentum for the USD/CAD pair. However, Moving Average Convergence Divergence (MACD) indicates a momentum shift for the USD/CAD pair. This interpretation is based on the MACD line's position above the centerline but shows divergence below the signal line. Traders would likely await the MACD, the lagging indicator, to confirm a directional trend.

On the upside, the immediate resistance appears at the psychological level of 1.3500 and the nine-day Exponential Moving Average (EMA) at 1.3506. A break above the latter could exert upward support for the USD/CAD pair to test the major level of 1.3550, aiming to navigate the region around the psychological level of 1.3600, aligned with March’s high of 1.3605.

USD/CAD: Daily Chart

• USD/CAD weakens around 1.3478 on the softer USD.
• The Fed’s dovish comments and mixed US February labor market data reaffirmed the expectation for a June rate cut.
• BoC’s Macklem said it’s premature to ease monetary policy despite the recent cooling in inflation.
• Traders will closely monitor the US February Consumer Price Index (CPI) inflation data, due on Tuesday.

The USD/CAD pair remains caped under the key 1.3500 barrier during the early Asian session on Tuesday. The decline of the US Dollar (USD) and lower US Treasury bond yields weigh on the pair. Investors await the US Consumer Price Index (CPI) inflation data for February, due later on Tuesday. At press time, USD/CAD is trading at 1.3478, down 0.03% on the day.

The mixed US labor market data for February was not strong enough to convince the Fed of monetary policy expectations. Additionally, the dovish comments from Federal Reserve (Fed) officials last week reaffirmed the expectation for a June rate cut. Fed Chair Powell said last week during his semiannual testimony that more confidence is needed before the central bank is ready to lower the rate, but they’re not far from it. Money markets are pricing in around 70% odds of an interest rate cut by June, according to the CME FedWatch tool.

The Bank of Canada held the interest rate unchanged at 5.0% for the fifth consecutive meeting last week, as widely expected. However, the BoC governor Tiff Macklem said during a press conference that it’s premature to cut interest rates until there’s more progress in taming core inflation. He further stated that the central bank needs to give higher rates more time to do its work. Money markets have pushed back bets for a fully priced in rate cut to July from June. This, in turn, boosts the Canadian Dollar (CAD) against the USD.

Traders will closely monitor the US February inflation data on Tuesday. The headline CPI is expected to remain steady at 3.1% YoY, while the core figure is projected to drop to 3.7% YoY. On Thursday, attention will shift to US Retail Sales, which is forecast to improve to 0.8% in February. These events could give a clear direction to the USD/CAD pair.

USD/CAD has steadied below 1.3500. Economists at Scotiabank analyze the pair’s outlook.

Potential bull flag pattern

• USD/CAD struggles to extend recovery above 1.3500 amid weak US Dollar.
• Cooling US labor market conditions indicate that Fed rate cut bets for June remain on the table.
• Slower Canada’s wage growth indicates that the inflation outlook is softening.

The USD/CAD pair faces pressure while attempting to extend recovery above the psychological resistance of 1.3500 in the European session on Monday. The Loonie asset is expected to resume its downside journey as the broader appeal for the US Dollar remains weak due to firm market expectations for the Federal Reserve (Fed) reducing interest rates in the June policy meeting.

The United States Nonfarm Payrolls (NFP) report for February, released on Friday, indicated that the Unemployment Rate rose to 3.9%, highest in two years, though in a comfortable range and monthly wage growth was significantly slower. On the contrary, labor demand remains robust as employers hired 275K workers against expectations of 200K.

Going forward, the US Dollar will be guided by the Consumer Price Index (CPI) data for February, which will be published on Tuesday and will provide fresh insights into the interest rate outlook.

On the Canadian Dollar front, slower wage growth has softened the inflation outlook. Annual Average Hourly Earnings grew at a significantly slower pace of 4.9% in February from a 5.3% increase in January. This could allow Bank of Canada (BoC) policymakers to consider reducing interest rates ahead.

USD/CAD trades in a Rising Channel chart pattern on a daily timeframe. The chart formation exhibits an upside bias with moderate strength, and market participants consider each pullback a buying opportunity. Near-term demand remains downbeat as the Loonie asset is trading below the 20-day Exponential Moving Average (EMA), which trades around 1.3510.

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

Fresh upside would appear if the asset breaks above January 17 high at 1.3542, which will drive the asset towards February 13 high at 1.3586, followed by the round-level resistance of 1.3600.

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 struggles to attract any meaningful buyers amid a mixed fundamental cue.
• Sliding Crude Oil prices and Friday’s mixed Canadian jobs data undermine the Loonie.
• Bets for a June Fed rate cut keep the USD bulls on the defensive and act as a headwind.

The USD/CAD pair struggles to capitalize on Friday's goodish rebound from the 1.3420 region, or a nearly one-month low and oscillates in range on the first day of a new week. The pair trades around the 1.3480 area, nearly unchanged for the day during the Asian session, and is influenced by a combination of diverging forces.

Crude Oil prices drift lower for the second straight day and retreat further from over a four-month peak set earlier this March amid concern about slowing demand in China, exacerbated by underwhelming import data for the first two months of 2024. Furthermore, mixed Chinese inflation data add to market worries and overshadow a tighter supply outlook. This continues to weigh on the black liquid, which is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair.

The Canadian Dollar (CAD) is further pressured by slowing domestic wage growth in February, to its lowest level since June, and an uptick in the unemployment rate. Meanwhile, the simultaneous release of the US jobs report pointed to a spike in the jobless rate to the highest level in two years reaffirmed bets that the Federal Reserve (Fed) will start cutting interest rates in June. This fails to assist the US Dollar (USD) to build on its recovery from a nearly one-month low and caps the upside for the USD/CAD pair.

The mixed fundamental backdrop warrants some caution for bullish traders and before positioning for any meaningful appreciating move for the currency pair. Market participants might also prefer to move to the sidelines ahead of the release of the latest US consumer inflation figures on Tuesday, which might influence the Fed's rate-cut path and drive the USD demand in the near term. This, along with Oil price dynamics, should help determine the next leg of a directional move for the USD/CAD pair.

• USD/CAD has broken below a major trendline and is unfolding lower. 
• Key fundamental data lies ahead with US Nonfarm Payrolls and Canadian Payrolls both coming out at the same time. 
• Unless the fundamental data is substantially bullish for the US Dollar, the downmove will probably extend.

The USD/CAD is down over a tenth of a percent on Friday as traders await the arrival of key employment metrics from both the US and Canada at 13:30 GMT. 

Over the last two and a half days the pair has fallen from 1.3600 to the 1.3430s as traders digested Federal Reserve (Fed) Chairman Jerome Powell’s dovish comments to US lawmakers. Powell said “we’re not far” from inflation falling to a level where it would be right to start cutting rates. Lower rates are negative for a currency as they tend to reduce foreign capital inflows.

The mood music around the Bank of Canada (BoC) meanwhile has been much less dovish after the Boc delivered a hawkish hold at its last policy meeting on Wednesday. 

The technical picture is showing some interesting developments as we head into what will probably be a volatile afternoon. 

USD/CAD is overall looking bearish. It has broken through a key trendline for the 2024 rally and the break coincides with a sell signal from the Moving Average Convergence/ Divergence (MACD) indicator as it crosses below its signal line (circled). The Relative Strength Index (RSI) is also relatively low – a bearish sign. 

US Dollar vs Canadian Dollar: Daily chart

It is possible to see the 2024 price action as forming a Wedge pattern – another potentially bearish motif. Since the trendline has a dual role as the bottom of the Wedge, the trendline break also indicates a breakout from the price pattern. 

The target for the breakdown is equal to the widest part of the Wedge pattern extrapolated lower from the breakout point lower. This gives a target at roughly 1.3350, which is also the level of the January lows. 

A break below that would solidify the reversal and probably see a run down to around the vicinity of the 2023 December lows in the 1.3170s.

Canada releases jobs figures for February today. Economists at ING analyze Loonie’s outlook ahead of the employment report.

Loonie still looks at the US more than Canada

• USD/CAD continues its losing streak on higher Crude oil prices.
• Canada’s Unemployment Rate is anticipated to reach 5.8% from 5.7 prior.
• US Nonfarm Payrolls could print a 200K figure for new jobs created in February, against 353K prior.

USD/CAD extends its losses for the third consecutive session on Friday, trading lower to near 1.3450 during the Asian hours. Market participants look forward to the labor data from Statistics Canada on Friday. February’s Unemployment Rate is expected to increase by 5.8% against 5.7 prior. Net Change in Employment is anticipated to print 20K against the previous figure of 37.3K.

The higher Crude oil prices contribute to underpinning the Canadian Dollar (CAD) and, consequently, act as a headwind for the USD/CAD pair. West Texas Intermediate (WTI) inches higher to near $78.90, at the time of writing.

Economists at ING have highlighted the persistent correlation between the Canadian dollar (CAD) and US data, as well as the strong connection between policy expectations of the Federal Reserve (Fed) and the Bank of Canada (BoC). Consequently, they suggest that significant movements in either direction for the USD/CAD pair appear unlikely at this time.

US Dollar Index (DXY) attempts to snap its losing streak ahead of the employment figures from the United States (US), hovering around 102 80, by the press time. US Initial Jobless Claims printed 217K reading for the previous week, surpassing the expectations of 215K. Meanwhile, US Nonfarm Productivity remained consistent, maintaining growth at 3.2% in the fourth quarter of 2023, against the market expectations of 3.1%. Friday is set to release employment numbers from the United States (US), which includes Average Hourly Earnings and Nonfarm Payrolls.

Federal Reserve (Fed) is expected to initiate an interest rate cut cycle starting from June. Fed Chair Jerome Powell reiterated the central bank's stance during his second day of testimony before the US Congress, further fueling speculation regarding potential rate cuts. Powell suggested that cuts in borrowing costs could occur sometime this year, with the condition that the inflation trajectory aligns with the Fed's 2% target.

USD/CAD has declined below the 1.3500 level. Economists at ING anlayze the pair’s outlook.

USD/CAD to head towards the 1.3000 mark in the second half of 2024

• Negative comments from Chairman Powell have weakened the US Dollar. 
• USD/CAD is selling-off to a key trendline and is threatening to break below it.
• The MACD indicator, useful in a range bound market, is issuing a sell signal. 

The USD/CAD is down a tenth of a percent on Thursday in line with widespread US Dollar (USD) weakness, as traders digest Federal Reserve (Fed) Chairman Jerome Powell’s comments to US lawmakers on the Wednesday, during the first day of his testimony to Congress. 

The Greenback sold-off steeply on Wednesday after Powell affirmed that the Fed was planning to cut interest rates subject to inflation falling closer to target. USD/CAD was particularly hit as the Fed’s stance contrasts with the hawkish hold adopted by the Bank of Canada (BoC) at its last meeting. 

The technical picture on the daily chart of USD/CAD is showing some interesting developments in line with the fundamentals. 

US Dollar vs Canadian Dollar: Daily chart

The chart above shows how the pair has been in a long sideways market since the end of 2022. 

The Moving Average Convergence/ Divergence (MACD) momentum indicator is especially useful to analyze range bound asset prices, as it tends to accurately mirror and predict the key turning points of prices oscillating in a range. This can be seen to be the case in the chart above. 

More recently USD/CAD has been rising up in the range since the turn at the end of 2023. Although it has not yet reached the range highs, the MACD has just crossed below the signal line, giving a sell signal and suggesting the trend may be about to change. The steep sell-off on Wednesday adds credence to the idea the market may be reversing. 

US Dollar vs Canadian Dollar: Daily chart

Price has fallen to the level of a key trendline for the 2024 rally. This is likely to be an important make-or-break support zone for the pair. The strength of the preceding day’s sell-off adds evidence to the possibility price could penetrate the trendline and begin moving south. 

A decisive break below the trendline – characterized by a long red candle that closes well below the trendline and near its low of the day, for example – would be the confirmation signal of a reversal of the 2024 uptrend and a probable new phase of weakness, targeting the range lows in lower 1.30s. If the pair prints three down days in a row and also breaks below the trendline that would be another confirmation of a “decisive break”. 

US Dollar vs Canadian Dollar: Daily chart

The possible evolution of a bearish Wedge price pattern in the move higher, as shown on the chart above, is another potentially negative motif. Such a pattern recommends a breakdown to a target equal to its widest point, extrapolated from the breakout point lower. This gives a target of roughly 1.3350. 

In the event that the trendline manages to hold, however, the pair may continue its slow upside grind, targeting the top of the wedge at roughly 1.3640 initially, and on a breakout higher, the top of the long-term range at 1.3900. 

The Loonie benefited significantly from Wednesday's BoC decision with USD/CAD nosediving a full figure lower to 1.3500. Economists at Commerzbank analyze the pair’s outlook.

Fairly hawkish decision

• USD/CAD attracts some intraday sellers on Thursday amid a weaker US Dollar.
• The BoC’s hawkish pause underpins the CAD and contributes to the downtick.
• Rebounding US bond yields and a softer risk tone to limit further USD losses.

The USD/CAD pair struggles to capitalize on the Asian session uptick on Thursday and languishes near the 1.3500 psychological mark, just above a one-week low touched the previous day.

Mixed signals on the Federal Reserve's (Fed) rate-cut path fail to assist the US Dollar (USD) to register any meaningful recovery from its lowest level since early February, which, in turn, is seen acting as a headwind for the USD/CAD pair. Fed Chair Jerome Powell told US lawmakers on Wednesday that the central bank will cut interest rates this year, though wants to see more evidence that inflation is falling to the 2% target. Minneapolis Fed President Neel Kashkari, however, downplayed speculations about more aggressive policy easing and said that he may reduce the number of cuts this year, possibly to only one in the wake of the incoming stronger US macro data.

The Canadian Dollar (CAD), on the other hand, continues to draw support from a hawkish hold from the Bank of Canada (BoC) on Wednesday. Meanwhile, subdued Crude Oil prices do little to provide any meaningful impetus to the commodity-linked Loonie. Furthermore, the yield on the benchmark 10-year US government bond rebounds from a one-month low touched on Wednesday, which, along with a generally softer tone around the equity markets, acts as a tailwind for the safe-haven buck. This, in turn, should help limit any meaningful downside for the USD/CAD pair and warrants some caution before positioning for any further depreciating move.

Moving ahead, investors now look to Fed Chair Powell's second day of testimony before the Senate Banking Committee. Apart from this, traders will take cues from Thursday's economic docket – featuring the US Weekly Initial Jobless Claims, and Trade Balance figures from the US and Canada. This, along with the US bond yields and the broader risk sentiment, will influence the USD demand and provide some impetus to the USD/CAD pair.