USD/CAD is attempting to return above 1.3800 with weak Oil prices hurting the Loonie

• The Canadian Dollar dips lower with Oil prices sliding on concerns about oversupply.
• Weak US data and dovish comments from Fed officials are limiting the US Dollar's recovery.
• Later today, US services activity data might give further support to the US Dollar.

The US Dollar is trimming losses on Tuesday, as the dust from the disappointing US Nonfarm Payrolls report settles. The Canadian Dollar is struggling amid lower Oil prices, which are ofsetting the impact of soft US macroeconomic figures and market expectations of upcoming Fed rate cuts.

The US Dollar appreciates moderately alongside higher US Treasury yields. The pair is testing levels above the 1.3800 mark, after bouncing at 1.3760 lows on Friday, still, well below last week's highs, at 1.3880.

Soft US data and dovish Fed rhetoric are limiting the USD's recovery

US data released on Monday showed a 4.8% contraction in Factory Orders in June, driven by a sharp decline in aircraft purchases. The final figures are slightly better than the 4.9% drop forecast by market analysts, yet a significant reversal from May's 8.3% growth

Also on Monday, San Francisco Fed President Mary Daly warned that the central bank should not wait too long to lower interest rates in light of the softening labour market. These comments contributed to feed hopes of Fed cuts in September, and put additional weight on the US Dollar's recovery.

Later today, the focus will be on the US Services activity data, which is expected to reveal some expansion in July, to offset the weak figures shown by the manufacturing sector.

The Canadian Dollar, on the other hand, is struggling amid lower Oil Prices. WTI Crude, Canada's main export, has depreciated by about $5 in less than one week. The OPEC+ approved a further hike of 547,000 barrels per day over the weekend, heightening concerns of an oversupply, considering the soft global economic outlook.