The USD/CAD currency pair has failed to build on its modest recovery from the previous day’s near year-to-date low, encountering fresh selling pressure during Thursday’s Asian session. The pair is currently trading around 1.3815, marking a 0.15% decline on the day, as it remains stuck within a multi-week range.
The U.S. dollar continues to face headwinds amid mounting economic uncertainty, further exacerbated by shifting trade policy signals from U.S. President Donald Trump. Trump has downplayed expectations for a quick resolution to the U.S.-China trade war, stating that he is in “no real hurry” to sign a deal and reaffirming his reluctance to reduce the 145% tariffs imposed on China. These comments have overshadowed the Federal Reserve’s cautious stance in its recent policy meeting, leaving USD bulls on the back foot and contributing to pressure on the USD/CAD pair.
On the other hand, Crude Oil prices have found some support after a brief pullback, aiding the Canadian dollar, which is closely linked to oil price movements. However, while expectations for a new U.S.-Canada trade deal have added some optimism for the Loonie, concerns about oversupply have risen following OPEC+’s decision to accelerate output increases. Additionally, waning hopes for a swift resolution to the U.S.-China trade dispute are further dampening demand for oil, capping any significant upside.
Given these mixed factors, it seems prudent to await confirmation of sustained selling before expecting a decisive breakdown in the USD/CAD pair. Traders are likely to keep an eye on the upcoming U.S. Weekly Initial Jobless Claims data, which could offer fresh direction for the currency pair later in the North American session. Additionally, oil price dynamics will likely continue to provide short-term trading opportunities, especially as the Canadian jobs report looms on Friday.
