USD/CAD Rebounds to 1.3730 as US Dollar Recovers Amid Mixed Sentiment

USD/CAD Rebounds to 1.3730 as US Dollar Recovers Amid Mixed Sentiment

June 3, 2025 – Forex Market Analysis

The USD/CAD currency pair bounced back from year-to-date lows near 1.3700, recovering to 1.3730 on Tuesday, as the US Dollar (USD) benefitted from a slight improvement in market sentiment.

US Dollar Recovery Driven by Sentiment Shift

The greenback has regained modest strength following recent declines, supported by a shift in risk sentiment and a temporary pause in selling pressure. Investors are cautiously watching the impact of trade policy shifts—particularly the effect of new tariffs on US manufacturing, highlighted by weaker PMI readings.

Despite the rebound, concerns about US fiscal sustainability and the broader economic cost of tariffs under a potential Trump administration are limiting speculative USD upside.

BoC Expectations Support Canadian Dollar

Meanwhile, the Canadian Dollar (CAD) remains fundamentally supported by hawkish expectations from the Bank of Canada (BoC). The BoC is seen as more likely to maintain or even tighten policy due to resilient domestic data and inflation concerns, which acts as a counterbalance to USD strength in the USD/CAD pair.

USD/CAD Technical Picture

• Support: 1.3700 (YTD low)
• Resistance: 1.3755 (near-term ceiling)
• Trend Bias: Bearish unless sustained break above 1.3755
• Market Focus: Fed and BoC commentary, oil prices, and geopolitical headlines

Related on Tredu.com:

• USD/CAD Explained: How Oil and BoC Policy Influence the Pair
• Tariff Policy and Its Ripple Effect on Forex Markets
• What Traders Need to Know About PMI Data