Canadian Dollar bounces back slightly on Tuesday

• The Canadian Dollar clawed back 0.25% against the Greenback on Tuesday.
• Market sentiment has pulled back from USD bidding after a strong start to the week.
• US CPI inflation eased to a three-year low, but markets are bracing for tariff fallout.

The Canadian Dollar caught a mild bid on Tuesday, largely thanks to a general easing in Greenback bidding across the broader market rather than any particular bullishness to be found on the book for the Loonie. US Consumer Price Index (CPI) numbers were the key data print for the day, and investors are beginning to grow increasingly anxious about how the next print will shape up as the Trump administration's tariffs begin to show up in the data.

With strictly low-tier data on the offering, the Canadian Dollar is entirely at the mercy of market-wide sentiment flows this week. The end of the temporary reprieve of US "reciprocal tariffs" also looms over the horizon, and firm details of a possible trade deal that would otherwise avert steep import taxes on Canadian goods bound for the US remain entirely absent.

Daily digest market movers: Canadian Dollar steps higher amid Greenback softness

• The Canadian Dollar rose one quarter of one percent against the US Dollar on Tuesday.
• USD/CAD has been forced back below the 1.3950 level as a result, chalking in a technical flub of the 200-day Exponential Moving Average (EMA) near 1.4030.
• US CPI inflation eased more than expected in April, however experts are warning that this could be the end of progress on stamping out inflation with tariff effects set to start showing up in headline data beginning in May.
• Moody's chief economist on the future of US inflation:
• "It felt like we could just about declare victory on putting inflation back in the bottle, and it's back out again. Soak this report in, it'll be a while before we get another good one."
• Despite an overall upbeat stance in global markets, market experts are pivoting into an increasingly bearish outlook for the future. According to Fitch Ratings:
• "In the absence of a lasting deal, uncertainty over where tariff rates will settle and the impact of those already implemented will remain key factors in our macroeconomic forecasts. Nor does the U.S.-China agreement mean the trade war, which is already having a tangible economic impact, is over."
• US Producer Price Index (PPI) inflation and University of Michigan Consumer Sentiment Index figures are due in the back half of the trading week.

Canadian Dollar price forecast

The Canadian Dollar's cautiously bullish step on Tuesday pushed USD/CAD back into the low side, snapping a four-day losing streak and kicking the pair back down and away from the 200-day EMA. Price action is poised for a possible bearish extension with technical oscillators rotating down from overbought territory. Still, news headline risks remain high for traders trying to nail down a near-term trend.

USD/CAD daily chart