Why Is USD/CAD Nearing Yearly Lows? | Key Factors Driving the Currency Pair's Decline

The 100 USDT to INRUSD/CAD currency pair has shown notable vulnerability in recent trading sessions, with Monday's attempted recovery stalling below the critical 1.3600 threshold. This development signals potential continuation of the downward trajectory that's brought the pair close to eight-month lows around 1.3565, reflecting shifting market dynamics across multiple fronts.Several interconnected factors are contributing to this technical weakness. The commodity-sensitive Canadian dollar has found unexpected support from energy markets, where crude oil prices have demonstrated resilience despite earlier corrections. After briefly dipping toward $71 per barrel, WTI crude has maintained levels that historically benefit Canada's export-driven economy. This petroleum price stability creates fundamental support for the loonie that's offsetting some traditional USD strength.Market sentiment appears to be undergoing subtle shifts regarding risk appetite. The gradual easing of Middle East tensions, with multiple nations offering mediation between conflicting parties, has reduced the typical safe-haven demand that often boosts the US dollar. This geopolitical de-escalation coincides with renewed focus on North American trade relationships, where anticipation builds around high-level discussions between US and Canadian leadership ahead of the G7 summit.The currency pair's technical landscape reveals important thresholds that traders are monitoring closely. Repeated failures to sustain momentum above 1.3600 suggest this level now acts as formidable resistance, while the year-to-date lows around 1.3565 present the next significant support zone. Between these markers, the pair's movement may reflect ongoing reassessment of macroeconomic conditions, particularly regarding energy markets and trade policy developments.Market participants continue evaluating the broader implications of shifting trade dynamics, especially regarding unresolved aspects of international commerce agreements. These fundamental considerations, combined with technical factors, create an environment where the USD/CAD pair remains sensitive to both scheduled economic data and unexpected geopolitical developments. The coming sessions may prove decisive in determining whether current support levels hold or give way to further downside movement.