USD/CAD falls sharply to 1.3800 despite multiple tailwinds

• USD/CAD falls to 1.3800 despite US Dollar strength.
• Investors believe the Bank of Canada has chosen the June meeting as the earliest time to pivot toward rate cuts.
• Oil prices weaken as the Fed's hawkish guidance raises doubts about the global economic outlook.

The USD/CAD pair fell to the 1.3800 support in the early hours of the American session on Wednesday. The Canadian dollar is facing pressure despite multiple tailwinds, such as hopes for a further rate cut from the Bank of Canada (BoC), a sharp drop in the price of oil, and the president's hawkish guidance. the Federal Reserve (Fed), Jerome Powell.

The S&P 500 opens positively, suggesting an improving risk appetite among market participants. US 10-year Treasury yields fall to 4.64% but remain near five-month highs as Fed Chair Jerome Powell supported the case for keeping interest rates higher for longer.

Meanwhile, the US Dollar Index (DXY), which tracks the value of the Dollar against six major currencies, is moving sideways above 106.00 points.

Traders expect an interest rate cut by the Bank of Canada at its June meeting as inflation continues its course toward the required 2% rate. The BoC's preferred measure of inflation, the core Consumer Price Index (CPI), which excludes eight volatile items, softened to 2.0% from the previous reading of 2.1%.

Last week, BoC Governor Tiff Macklem acknowledged that a rate cut is possible in June if inflation continues to slow steadily, after keeping interest rates unchanged at 5%.

Meanwhile, West Texas Intermediate (WTI) futures on NYMEX have fallen to $84.00 as the gloomy global economic outlook outweighs fears of tight supply. Greater prospects of the Fed maintaining the monetary policy framework for longer weigh on the oil price. Investors fear global oil supplies remain tight amid rising tensions in the Middle East.