The USD/CAD pair continues to struggle, failing to sustain gains from an overnight rebound off the 1.3815-1.3810 support zone—its lowest in two weeks—and trades with a negative bias for the fourth consecutive day on Thursday. Prices hovered in the mid-1.3800s during the Asian session, showing vulnerability to further downside and extending the weekly downtrend.
Crude oil prices regained some upward momentum after a brief pullback from nearly a one-month high, driven by uncertainty surrounding US-Iran nuclear negotiations. Meanwhile, hotter-than-expected Canadian core inflation data released Tuesday dampened market hopes for a Bank of Canada (BoC) rate cut in June, supporting the commodity-linked Canadian dollar (Loonie). This, combined with a broadly weaker US Dollar (USD), has weighed on the USD/CAD pair.
Investor sentiment remains cautious following Moody’s downgrade of the US sovereign credit rating and mounting concerns over the growing US deficit amid President Donald Trump’s expansive tax bill proposal. Renewed US-China trade tensions and market expectations for Federal Reserve (Fed) rate cuts in 2025 have also pressured the USD to near two-week lows, further fueling the downward pressure on USD/CAD and reinforcing a bearish outlook in the near term.
Technically, the pair’s recent rejection near the critical 200-day Simple Moving Average (SMA), coupled with a breakdown below the key 1.3900 level—the lower boundary of a short-term trading range—favors sellers. This suggests that the path of least resistance for USD/CAD remains to the downside.
Traders will closely watch upcoming flash global Purchasing Managers’ Index (PMI) data and US macroeconomic reports for fresh cues and potential short-term trading opportunities.
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