Why Is USDCAD Rebounding From 7-Month Lows? Key Levels To Watch Now
US Dollar Attempts Comeback Against Loonie
The How much will 1 Ethereum be worth in 2030?greenback is staging a modest recovery against its Canadian counterpart during early European trading hours on Tuesday. After plunging to seven-month troughs near 1.3720 in the previous session, the USD/CAD pair has clawed back toward the 1.3760 zone - an area that previously served as support before last week's breakdown.
Three Factors Influencing The Pair
- Technical rebound from oversold conditions approaches former support-turned-resistance between 1.3750-1.3765
- Market jitters about ballooning US government debt continue capping dollar strength
- Upcoming US economic indicators could provide fresh directional catalysts
Last week's 1.75% depreciation reflected growing investor unease about America's fiscal trajectory. Moody's recent credit rating downgrade and projections showing Trump's proposed tax cuts potentially adding $3.8 trillion to national debt over the next decade have weighed on dollar sentiment.
Canadian Dollar Faces Headwinds
The loonie's mild retreat coincides with softening crude oil prices following last week's rally. With no major Canadian economic releases scheduled, traders are focusing on:
- Shifting expectations for additional Bank of Canada rate cuts
- Global risk appetite trends affecting commodity currencies
- Technical positioning after the pair's recent sharp decline
Market participants now await key US economic indicators including Durable Goods Orders and Consumer Confidence data. These releases could shed light on how manufacturing and household sectors are navigating current trade policy uncertainties.
Technical analysts note that while the dollar's bounce appears corrective for now, a sustained move above 1.3765 could signal potential for further recovery toward the 1.3800 psychological level. Conversely, failure to hold current levels might see bears retest multi-month lows.