• The USD/CAD exchange rate rises for the second day in a row, however there is little continuation.
• The USD reaches a multi-week high and receives support from decreased bets on a June Fed rate drop.
• The Loonie appears to be supported by rising crude oil prices, which also serve as a drag on the pair.

For the second day in a row, buyers are drawn to the USD/CAD pair on Tuesday as it attempts to consolidate its overnight gain from the 1.3515 area, or over a one-week low. Spot prices are presently trading around the 1.3580 range and are still being supported by follow-through purchases of US dollars (USD), while higher crude oil prices may limit any further gains.

Due to uncertainty over whether the Federal Reserve (Fed) would lower interest rates three times this year, the USD Index (DXY), which measures the value of the US dollar against a basket of currencies, has risen to its highest level since February 14. Following the release of the positive US statistics, which revealed that the manufacturing sector saw growth in March for the first time since September 2022, investors reduced their bets for a June Fed rate drop. This continues to be positive for high US Treasury bond rates, which benefits the US dollar and the USD/CAD pair.

In addition, it turns out that the risk-off impulse also helps the safe-haven Greenback. In the meanwhile, the risk of a further escalation of Middle East hostilities and signs of stronger demand have kept crude oil prices steady near a five-month high set on Monday. The commodity-linked Loonie appears to be supported by this, which could deter traders from making further bullish wagers on the USD/CAD pair. The recent history of consistently failing to get approval over the 1.3600 threshold even from a technical standpoint calls for some prudence.

The US economic docket, which will include the release of JOLTS Job Openings and Factory Orders later in the early North American session, is now anticipated by market participants. The USD/CAD pair should gain some momentum from this, as well as from remarks made by significant FOMC members, US bond yields, and the general risk attitude. Traders will also use the fluctuations in oil prices as a guide to seize transient chances.