Usdcad Faces Persistent Selling

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Usdcad Faces Persistent Selling

Usd/Cad Moves Down From 1.3645 Amid Persistent Selling

USD/CAD is struggling to move higher from the 1.3645, which was the 1-month top for the pair. Instead, the pair has moved lower and is now trading in the bottom end of its daily trading range.

As of now, USD/CAD is seen as near 1.3600, with a bearish bias for the day. It seems that the rebound seen in USD/CAD has finally ended after the 0.50% rate cut by the Federal Reserve.

Fed Starts Its Rate-Cutting Cycle

The US Dollar has ended up giving away most of its intraday gains as the market mood has changed after the FOMC decision. The same goes for the USD/CAD which is now telling the story of US Dollar weakness.

Besides this, the crude oil prices are back on the rise again, which has also helped the Loonie. That's also one reason why the USD/CAD shed 50 pips during the intraday session.

At the same time, the USD/CAD lacks any follow-through on the selling. This is a sign that traders are still cautious and are trying to digest the FOMC decision from yesterday.

Meanwhile, the Federal Reserve started its policy-easing cycle in 2024 with a deep 0.50% rate cut. At the same time, the US central bank has discarded any hopes for a bigger rate cut for the rest of the year.

So, that's one reason why the US bond yields are now trending higher despite the recent rate cut. On the other hand, the BoC is also expected to deliver a deeper rate cut. So, that's yet another reason why the USD/CAD downside remains capped.

Now, the traders are looking forward to the Weekly Initial Jobless Claims, Existing Home Sales, and Philly Fed Manufacturing Index. The overall sentiment of the US Dollar and the bond yields also hint that the upside may return to the USD/CAD.

It seems that the effects of the Federal Reserve rate cut will eventually be balanced by a similar rate cut by the BoC.

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