The USD/CAD currency pair continues to face challenges in reclaiming a position above the 100-day Simple Moving Average (SMA), attracting fresh selling pressure during the Asian session on Wednesday. Despite this, spot prices managed a slight rebound from the 1.4200 region, remaining within a broader trading range that has persisted since the start of the week, driven by mixed market signals.
Crude Oil prices have slumped to a fresh multi-year low, fueled by concerns that US President Donald Trump’s sweeping tariffs and the escalating US-China trade war could push the global economy into a recession, weakening fuel demand. Additionally, the potential for heightened trade tensions between the US and Canada, coupled with political uncertainty ahead of Canada’s snap election on April 28, has weighed on the commodity-linked Canadian Dollar (Loonie), providing a tailwind for the USD/CAD pair.
Investor sentiment has also been affected by growing expectations that the Federal Reserve (Fed) will implement multiple rate cuts this year, as concerns over a tariff-induced US economic slowdown persist. This has contributed to further US Dollar selling for the second consecutive day, limiting the potential for significant upside movement in the USD/CAD pair. Traders are likely to adopt a cautious stance, waiting for the release of the Federal Open Market Committee (FOMC) meeting minutes later today.
Looking ahead, the release of the US Consumer Price Index (CPI) on Thursday and the Producer Price Index (PPI) on Friday will be key for investors. These crucial data points are expected to provide insight into the pace of future interest rate cuts by the Fed, influencing the US Dollar and potentially generating more significant movement in the USD/CAD pair. In the meantime, market developments related to trade and fluctuations in oil prices may offer short-term trading opportunities for the currency pair.
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