- USD/CAD trades with a mild negative bias for the second successive day on Tuesday.
- Bullish Crude Oil prices underpin the Loonie and exert pressure amid a softer USD.
- The downside seems limited as traders await the key FOMC decision on Wednesday.
The USD/CAD pair remains on the defensive for the second successive day on Tuesday and hits a three-day low, around the 1.3150 region during the Asian session.
Crude Oil prices consolidate the recent strong gains to over a three-month high touched on Monday and remain well supported by hopes that more stimulus from China - the world’s largest oil importer - will boost fuel demand. Apart from this, expectations for tighter global supply act as a tailwind for the black liquid, which, in turn, is seen underpinning the commodity-linked Loonie and acting as a headwind for the USD/CAD pair.
The US Dollar (USD), on the other hand, pulls back from a two-week high and for now, seems to have stalled the recent recovery move from the lowest level since April 2022, witnessed over the past week or so. This is seen as another factor exerting some pressure on the USD/CAD pair, though the lack of strong follow-through selling warrants some cation before placing aggressive bearish bets and positioning for further losses.
Traders might prefer to move to the sidelines and wait for fresh cues about the Federal Reserve's (Fed) future rate-hike path. It is worth recalling that the markets have been pricing out the possibility of any further interest rate hikes after the expected 25 bps lift-off at the end of a two-day FOMC meeting on Wednesday. Hence, the focus remains on the accompanying policy statement and Fed Chair Jerome Powell's remarks at the post-meeting press conference.
The Fed's policy outlook will play a key role in driving the USD demand in the near term and provide a fresh directional impetus to the USD/CAD pair. In the meantime, traders on Tuesday will take cues from the release of the Conference Board's US Consumer Sentiment Index and Richmond Manufacturing Index. This week's US economic docket also features the Advance Q2 GDP print and the Core PCE Price Index - the Fed's preferred inflation gauge.
Apart from this, Oil price dynamics might further contribute to producing some meaningful trading opportunities around the USD/CAD pair. The aforementioned fundamental backdrop, meanwhile, makes it prudent to wait for strong follow-through selling and a sustained break/acceptance below the 1.3100 mark to support prospects for the resumption of the downward trajectory from the YTD peak touched in March.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Door open to extra losses
AUD/USD remained on the back foot on Tuesday, down for the third day in a row and retreating to five-day lows near the key 0.6500 support, always amid the resurgence of the strong demand for the US Dollar, this time underpinned by higher US inflation readings in June.
EUR/USD: Further weakness could extend to 1.1460
On Tuesday, the EUR/USD resumed its negative trend by falling below the crucial support at 1.1600 the figure and reaching fresh three-week lows against the background of a stronger Greenback. So far in July, the pair has only closed higher on two occasions.
Gold's selling pressure picks up pace, focus on $3,320
Gold prices now lose the grip and prompt the precious metal to retreat to daily troughs near the $3,320 mark per troy ounce. The increasing selling pressure around the yellow metal comes in response to a stronger US Dollar, rising US yields across the curcve, and the idea that the Fed might remain cautious for longer.
Ripple Prediction: XRP eyes breakout past $3.00 amid 'Crypto Week'
Ripple (XRP) drops below $3.00 on Tuesday, exchanging hands at $2.87 during the American session. The volatility follows XRP's rally, which tagged a weekly high of $3.03 the previous day, reflecting investors' desire to de-risk in the broader cryptocurrency market.
China’s first-half growth remains on track, though activity data signals caution
China's second-quarter GDP beat forecasts again with a 5.2% year-on-year growth, driven by strong trade and industrial production. Yet sharper-than-expected slowdowns in fixed-asset investment and retail sales and falling property prices are a concern.
Best Brokers for EUR/USD Trading
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.