USD/CAD flirts with session lows, around 1.4075-70 region

• USD/CAD met with some fresh supply on Monday and eroded a part of Friday’s positive move.
• Rallying oil prices underpinned the loonie and was seen as a key factor exerting some pressure.
• The USD struggled to gain any meaningful traction and did little to lend any support to the pair.

The USD/CAD pair traded with a mild negative bias through the early European session and was last seen trading near the lower end of its daily trading range, around the 1.4070-65 region.

The pair failed to capitalize on the previous session’s goodish intraday positive move of nearly 100 pips and met with some fresh supply on the first day of a new trading week. The downtick was sponsored by a goodish pickup in crude oil prices and a subdued US dollar price action.

Oil prices climbed around $1.5 a barrel on Monday, or nearly 5%, supported by output cuts and signs of gradual demand recovery on the back of easing lockdown restrictions. This, in turn, underpinned the commodity-linked currency loonie and exerted some pressure on the USD/CAD pair.

On the other hand, the US dollar struggled to gain any meaningful traction, instead was seen consolidating below three-week tops set on Friday. The USD bulls seemed rather unimpressed by the Fed Chair Jerome Powell’s optimistic comments about the US economy.

Despite the pullback, the USD/CAD pair remained well within a broader trading range held over the past few trading session. This makes it prudent to wait for a sustained move in either direction before traders start positioning for the pair’s near-term trajectory.

There isn’t any major market-moving economic data due for release, either from the US or Canada. Hence, the broader market risk sentiment, along with the USD/oil price dynamics might influence the pair’s momentum and produce some short-term trading opportunities.

Technical levels to watch