Ella 
USD/CAD has turned lower after rising to the 1.3865 area during Tuesday’s Asian session and now appears to have snapped a nine-day winning streak to its highest level since November 2023. Intraday losses have dragged spot prices back below 1.3850 over the past hour, but any meaningful corrective decline remains elusive.
Crude oil prices faced selling pressure for a third day in a row as concerns about a widening conflict in the Middle East subsided. On top of that, worries about weak demand from China, the world’s largest crude importer, pushed crude prices to their lowest levels since June 10. Combined with the Bank of Canada’s (BoC) dovish outlook, this could continue to weaken the commodity-linked Canadian dollar and act as a bullish factor for USD/CAD.
Meanwhile, growing consensus that the Federal Reserve will begin a rate-cutting cycle in September has put dollar bulls on the defensive below the 2-1/2-week high hit on Monday. Additionally, the relative strength index (RSI) on the daily chart shows slightly overbought conditions. This in turn has prompted some profits in USD/CAD, especially after the recent bounce of nearly 300 pips from monthly swing lows.
Market participants now look forward to the U.S. economic calendar, which includes the release of the Chamber of Commerce Consumer Confidence Index and JOLTS job openings. However, focus will remain on the outcome of Wednesday’s two-day FOMC policy meeting. In addition to this, Friday’s closely watched U.S. non-farm payrolls (NFP) report will drive U.S. dollar trends in the near term and provide new directional momentum for USD/CAD.
