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  • USD/CAD witnessed an intraday pullback of around 100 pips from seven-day tops.
  • A goodish bounce in oil prices underpinned the loonie and exerted some pressure.
  • The strong USD bid tone helped limit the losses, rather attracted some dip-buying.

The USD/CAD pair quickly recovered around 40-50 pips from daily lows and was last seen trading in the neutral territory, around the 1.4100 mark.

The pair failed to capitalize on its early positive move and witnessed an intraday pullback of around 100 pips from levels just above mid-1.4100s, or seven-day tops set earlier this Monday.

A goodish recovery of around 5% in oil prices provided a modest lift to the commodity-linked currency – the loonie – and turned out to be a key factor that exerted some pressure on the major.

However, persistent worries about a global supply glut and slump in demand amid coronavirus-induced lockdowns capped any further upside for oil and helped limit deeper losses for the pair.

This comes on the back of a weaker market risk sentiment, which continued lending some support to the US dollar’s perceived safe-haven status and attracted some dip-buying near mid-1.4000s.

Against the backdrop of concerns about the economic fallout from the virus outbreak, the global risk sentiment deteriorated further amid a US-China spat over the origin of the coronavirus.

The greenback stood tall following the US Treasury Secretary Steve Mnuchin’s comments that Trump administration is prepared to back additional coronavirus stimulus money if needed.

It will now be interesting to see if the pair is able to gain any further traction and build on its recent strong bounce from six-week lows amid absent market-moving economic releases.

Moving ahead, this week’s important US macro data scheduled at the start of a new month, including the monthly jobs report (NFP), will now be looked upon for a fresh directional impetus.

Technical levels to watch