Ella 
USD/CAD struggled to extend the previous day’s strong rebound from 1.3300, or three-month lows, during Tuesday’s Asian session, trading with a mildly bearish bias just below the 1.3400 mark.
However, dovish comments from Bank of Canada (BOC) Governor Steve Marklem overnight, saying the central bank may start cutting interest rates sometime in 2024, still prevented USD/CAD from falling. Markets quickly fluctuated on the comments, with the Bank of Canada expected to begin easing policy as soon as April and cutting interest rates by at least 100 basis points cumulatively by the end of next year. This will therefore again act as a tailwind for USD/CAD, although the recent recovery in crude oil prices has tended to favor the commodity-linked Canadian dollar.
Beyond that, a modest rise in the U.S. dollar should also provide support for USD/CAD and limit any downside moves. Chicago Fed President Austan Goolsbee and Cleveland Fed President Loretta Mester on Monday pushed back on market bets that the Bank of Canada would cut interest rates early. This comes after New York Fed President John Williams said on Friday that it was too early to speculate on a rate cut. In addition to this, geopolitical risks also favor the safe-haven status of USD/CAD.
Meanwhile, traders appear reluctant to make aggressive directional bets on USD/CAD, preferring to wait for the latest consumer inflation data from Canada to provide fresh momentum for USD/CAD late in the U.S. session . Meanwhile, U.S. economic data will release housing market data – building permits and housing starts. In addition, Richmond Fed President Thomas Barkin is scheduled to speak, which will also affect the trend of the U.S. dollar. Coupled with the continued volatility of oil prices, it should bring short-term trading opportunities for USD/CAD.
