During today’s European trading hours, the USD/CAD pair saw a reduction in its recent gains, with the rate hovering around 1.3670. The uptick in global risk appetite has contributed to a softening of the US Dollar, impacting the USD/CAD exchange rate.

US Dollar Index and Treasury Yields Influence USD/CAD Dynamics

The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, declined to approximately 105.60, marking a decrease of 0.23%. This drop follows a decrease in US Treasury yields, which reacted to mixed signals from recent US manufacturing data, placing downward pressure on the dollar.

US Economic Data and Federal Reserve Implications

Recent data from the US Department of Commerce highlighted a 2.6% month-over-month increase in Durable Goods Orders for March, the most significant rise since November, driven by a robust demand for transportation equipment.

However, core goods excluding transportation saw a modest 0.2% increase, missing the expected 0.3%. Looking ahead, the upcoming preliminary GDP data for Q1 in the US is anticipated to show a deceleration in economic growth, which may influence the Federal Reserve’s monetary policy decisions.

Canadian Economic Outlook and Potential BoC Actions

The Canadian Dollar faces challenges following disappointing Retail Sales data, fueling speculation that the Bank of Canada might reduce interest rates in its June meeting. Such expectations could place further pressure on the Canadian currency.

USD/CAD Price Forecast: Technical Perspective

Yesterday, USD/CAD tested a minor resistance at $1.3705 but faced continual downward pressure from the EMA50, alongside bearish signals from the stochastic indicators.

This technical setup supports the prediction of a continuing bearish trend. Key targets are set at $1.3620 and could extend to $1.3565, contingent on the price holding below $1.3760, which is crucial for these bearish objectives.

The expected trading range for today is between support at $1.3600 and resistance at $1.3750, with the overall trend forecasted as bearish.