The USD/CAD pair is encountering difficulties in its attempt to recover following an overnight rebound from the 1.3815–1.3810 level, indicating a continuation of the week-long downtrend.

Oil prices are rebounding after a recent pullback, which is also supporting the Canadian dollar. Uncertainty surrounding nuclear negotiations between the U.S. and Iran is putting additional pressure on the market, driving oil prices higher—an outcome that benefits the Canadian dollar. Recently released stronger-than-expected core inflation data in Canada has dampened expectations for a rate cut by the Bank of Canada, further bolstering the loonie.

On the other hand, the U.S. dollar remains under pressure due to Moody's downgrade of the U.S. sovereign credit rating, growing concerns over the widening U.S. budget deficit linked to President Donald Trump's sweeping tax reform plan, and ongoing tensions in trade relations with China. Expectations that the Federal Reserve may cut interest rates in 2025 are also keeping the dollar weak, contributing to continued downward pressure on the USD/CAD pair.

From a technical perspective, the recent breakdown below the 200-day Simple Moving Average (SMA) and breach of the psychological 1.3900 level favor the bears. Oscillators on the daily chart are also in negative territory, confirming a short-term bearish outlook for USD/CAD.

Today, traders should watch for new trading opportunities during the North American session, particularly following the release of preliminary global PMI figures and macroeconomic data from the U.S.