Canadian Dollar pares away more gains as US Dollar recovers ground

The Canadian Dollar (CAD) stumbled into a second straight day of declines on Thursday. The US Dollar (USD) continues to gain ground despite a fresh interest rate cut from the Federal Reserve (Fed), as market tensions surrounding shaky US economic conditions and still-high Treasury yields keep the safe-haven Greenback well-bid.

The Bank of Canada (BoC) delivered its own quarter-point interest rate cut this week, kicking out what little support the Loonie had against the US Dollar. Rate markets are now sceptical about the BoC’s ability to deliver further economy-supporting rate trims looking forward, with the Canadian economy grappling with flagging data releases and recession concerns buoyed into the high end.

Canadian Dollar price forecast

The Canadian Dollar has eased back against the US Dollar heading through the midweek, sending USD/CAD higher after a third straight bounce from a technical support zone near 1.3740. The pair is now back into a congestion point at the 50-day Exponential Moving Average (EMA) near 1.3790, and near-term price action is struggling to find meaningful momentum on either side of the 1.3800 handle.

USD/CAD daily chart