• USD/CAD appreciates due to the rising likelihood of further interest rate cuts by the Bank of Canada.
• BoC Governor Tiff Macklem stated that policymakers could switch to a 50 basis point rate cut if economic growth underperforms.
• CME FedWatch Tool suggests odds of a 50 basis points Fed interest rate cut have surged to 62.0%.

USD/CAD recovers its recent losses registered in the previous session, trading around 1.3600 during Tuesday’s Asian hours. The Canadian Dollar (CAD) might have received downward pressure from growing expectations of further interest rate cuts by the Bank of Canada (BoC).

Additionally, the recent comments of Bank of Canada (BoC) Governor Tiff Macklem might have put downward pressure on the Canadian Dollar. Macklem has opened the door to accelerating the pace of interest rate reductions. He further stated that policymakers could switch to a 50 basis point (bps) rate cut if economic growth underperforms, per the Financial Times.

Traders will likely monitor Canada's Consumer Price Index (CPI) data for August, scheduled for release later in the North American session. This inflation report could offer fresh insights into the Bank of Canada's outlook ahead of its October policy decision.

However, the upside of the USD/CAD pair may be limited as the US Dollar faces challenges amid increasing expectations of an aggressive 50 basis points Fed rate cut on Wednesday. However, the improved US Treasury yields could support for Greenback.