The USD/CAD pair encountered renewed selling pressure on Wednesday, although sustained downward momentum was limited. Expectations of multiple Federal Reserve rate reductions in 2025 exerted downward pressure on the USD, contributing to the decline in spot prices. Concurrently, declining crude oil prices and domestic political uncertainty in Canada weighed on the Canadian dollar. The USD/CAD pair’s attempts to surpass the 100-day Simple Moving Average (SMA) have been unsuccessful, attracting sellers during the Asian trading session. Spot prices experienced a minor rebound from the 1.4200 area, remaining within the established trading range due to mixed market signals. Crude oil prices reached new multi-year lows amid concerns that US tariffs and escalating US-China trade tensions could trigger a global recession, thereby reducing fuel demand. Furthermore, the potential for heightened US-Canada trade tensions and political instability preceding the Canadian election on April 28 negatively impacted the commodity-linked Canadian dollar, providing support for the USD/CAD pair. Investor sentiment increasingly anticipates multiple Federal Reserve rate cuts this year, driven by ongoing concerns about a tariff-induced US economic slowdown. This has resulted in consecutive days of USD selling, likely capping any significant upward movement for the USD/CAD pair. Market participants may adopt a cautious stance, refraining from aggressive positions ahead of the release of the FOMC meeting minutes later in the day.
