USD/CAD finds some support near 1.4200 mark as Oil prices plunge to fresh multi-year low

USD/CAD meets with a fresh supply on Wednesday, though it lacks follow-through.

Bet for multiple Fed rate cuts in 2025 weigh on the USD and drag spot prices lower.

Tumbling Crude Oil prices and domestic political uncertainty weigh on the Loonie.

The USD/CAD pair continues with its struggle to move back above the 100-day Simple Moving Average (SMA) and attracts fresh sellers during the Asian session on Wednesday. Spot prices, however, rebound a few pips from the 1.4200 neighborhood and remain confined in a broader trading range held since the beginning of this week amid mixed cues.

Crude Oil prices sink to a fresh multi-year low on the back of worries that US President Donald Trump's sweeping tariffs and the escalating US-China trade war would push the global economy into recession, which, in turn, could weaken fuel demand. Apart from this, the risk of a further escalation of US-Canada trade tensions, along with political uncertainty ahead of the Canadian snap election on April 28, undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair.

Meanwhile, investors ramped up their bets that the Federal Reserve (Fed) will cut rates multiple times this year amid persistent worries about a tariffs-driven US economic slowdown. This prompts some follow-through US Dollar (USD) selling for the second straight day and should keep a lid on any meaningful upside for the USD/CAD pair. Traders might also refrain from placing aggressive bets and opt to move to the sidelines ahead of the release of the FOMC meeting minutes later today.

Furthermore, investors this week will confront the release of the US Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and Friday, respectively. The crucial data should provide cues about the pace of future interest rate cuts by the Fed, which, in turn, will drive the USD and provide some meaningful impetus to the USD/CAD pair. In the meantime, trade-related developments and Oil price dynamics might produce short-term trading opportunities around the currency pair.