• USD/CAD stages a goodish rebound from a one-week low touched earlier this Tuesday.
• Sliding Crude Oil prices undermine the Loonie and lend support amid a stronger USD.
• Dovish Fed expectations and the risk-on mood might cap gains for the USD and the pair.

The USD/CAD pair attracts some dip-buying following an intraday dip to sub-1.3800 levels, or a one-week low and touches a fresh daily top during the early part of the European session on Tuesday. Spot prices currently trade around the 1.3835-1.3840 region and for now, seem to have stalled a sharp retracement slide from the highest level since October 2022 touched on Monday. 

Against the backdrop of worries about an economic downturn in China, the incoming softer US macro data suggested that the world's largest economy was slowing faster than initially expected. This is expected to dent fuel demand and drags Crude Oil prices lower for the fourth straight day, which, in turn, is seen undermining demand for the commodity-linked Loonie. Apart from this, a goodish pickup in the US Dollar (USD) demand, supported by rebounding US Treasury bond yields, turn out to be a key factors acting as a tailwind for the USD/CAD pair. 

That said, a turnaround in the global risk sentiment, along with dovish Federal Reserve (Fed) expectations, might hold back the USD bulls from placing aggressive bets and cap gains for the currency pair. In fact, the markets are currently pricing in a near 100% chance that the US central bank will cut interest rates by 50 basis points in September. This should keep a lid on any further upside for the US bond yields and the Greenback, warranting caution for the USD/CAD bulls in the absence of any relevant market-moving economic releases from the US or Canada.