USD/CAD Recovers from Seven-Month Low, Approaches 1.3760 Resistance Zone

USD/CAD Recovers from Seven-Month Lows and Moves Close to an Old Support of 1.3760

The US Dollar (USD) is staging a modest recovery against the Canadian Dollar (CAD) during early Tuesday trading, following a sharp decline on Monday that pushed the pair to its lowest level in seven months. The USD/CAD is now approaching a previously established support-turned-resistance zone between 1.3750 and 1.3765, where further upward momentum may be challenged.

Last week, the US Dollar fell by 1.75% against the Canadian Dollar, driven by investor flight from USD-denominated assets. This risk aversion was triggered by Moody’s downgrade of the US credit outlook and intensifying concerns over the long-term fiscal impact of President Donald Trump’s expansive tax plan.

While today's bounce reflects a momentary pause in bearish sentiment, the broader outlook for the US Dollar remains fragile. The ongoing US debt concerns continue to cast a shadow on any sustained recovery in USD demand.

Later in the day, traders will closely watch the release of key US macroeconomic indicators—including Durable Goods Orders and the Conference Board's Consumer Confidence Index. These data points could play a critical role in shaping near-term market sentiment toward the USD and determining whether the recovery can extend beyond current resistance levels.

For now, the technical landscape suggests limited upside unless USD/CAD manages to break and hold above the 1.3765 mark. Failure to do so may open the door to renewed selling pressure, especially if US data underperforms expectations.