- USD/CAD encounters new selling pressure on Tuesday as the broader USD weakness continues.
- Weak Crude Oil prices, coupled with domestic political instability, could limit the upside potential of the Canadian Dollar (CAD).
- The technical indicators suggest a bearish outlook, reinforcing the likelihood of continued declines.
USD/CAD Faces Renewed Selling Pressure in Asia Amid USD Weakness
The USD/CAD pair failed to maintain its modest overnight rebound from the 1.3780 zone—a six-month low—and faced fresh selling interest during the early Asian session on Tuesday. As of the latest trade, the pair has dropped toward the 1.3800 handle, with bearish sentiment persisting amid broader USD weakness.
Dollar Weakness Driven by Political and Policy Uncertainty
The decline in the greenback is largely attributed to recent political developments in the United States. President Donald Trump’s fluctuating stance on tariffs has fueled uncertainty and diminished confidence in the U.S. economic outlook. Additionally, his recent criticism of Federal Reserve Chair Jerome Powell has raised concerns about the Fed’s independence. These factors are collectively undermining the USD’s appeal as a safe-haven asset.
Oil Prices and Canadian Politics Curb Loonie Strength
While a weaker USD typically benefits the Canadian dollar, that support has been limited due to stagnant crude oil prices. Oil remains below Friday’s two-week highs as fears of a prolonged trade war continue to weigh on global demand expectations. Moreover, political tensions ahead of Canada’s snap elections scheduled for April 28 are injecting uncertainty, limiting the Loonie’s upside potential.
Technical Breakdown Hints at More Losses
From a charting standpoint, USD/CAD has broken below the key 200-day Simple Moving Average (SMA) for the first time since October 2024, signaling a bearish shift. Daily momentum indicators remain firmly in negative territory, reinforcing the downside outlook. Any recovery attempts are likely to face resistance near the mid-1.3800s, limiting bullish prospects.
Short-Term Recovery Zones to Watch
Should buyers step in and drive a recovery, short-covering could push USD/CAD back towards the 1.3900 psychological mark. A sustained move beyond this level may target 1.3950–1.3955, followed by the key resistance near 1.3975–1.3980. However, any significant upside is expected to be limited near 1.4000 or the 200-day SMA.
Key Support Levels and Bearish Continuation
On the downside, a decisive break below Monday’s low at 1.3780 would reinforce the bearish narrative. This could pave the way for a further decline towards the 1.3750–1.3745 region. Sustained selling might then push the pair lower, with the next major support seen near 1.3700 and subsequently around 1.3650–1.3660.
USD/CAD Daily Price Analysis
