Let $\varepsilon> 0$ be sufficiently small and let $0 < \eta < 1/522$ . We show that if X is large enough in terms of $\varepsilon $ , then for any squarefree integer $q \leq X^{196/261-\varepsilon }$ that is $X^{\eta }$ -smooth one can obtain an asymptotic formula with power-saving error term for the number of squarefree integers in an arithmetic progression $a \pmod {q}$ , with $(a,q) = 1$ . In the case of squarefree, smooth moduli this improves upon previous work of Nunes, in which $196/261

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... 0.75096\ldots $ was replaced by $25/36 = 0.69\overline {4}$ . This also establishes a level of distribution for a positive density set of moduli that improves upon a result of Hooley. We show more generally that one can break the $X^{3/4}$ -barrier for a density 1 set of $X^{\eta }$ -smooth moduli q (without the squarefree condition). Our proof appeals to the q-analogue of the van der Corput method of exponential sums, due to Heath-Brown, to reduce the task to estimating correlations of certain Kloosterman-type complete exponential sums modulo prime powers. In the prime case we obtain a power-saving bound via a cohomological treatment of these complete sums, while in the higher prime power case we establish savings of this kind using p-adic methods.