USD/CAD rebounds from 3-month lows, still below 1.3100 handle

• Sliding Oil prices undermined the Loonie and extended some support.
• A modest USD uptick provided an additional boost in the last hour.
• Friday’s US durable goods orders data eyed for a fresh trading impetus.

The USD/CAD quickly reversed an early European session dip to three-month lows and jumped around 20 pips in the last hour, refreshing daily tops around the 1.3085 region.
 
The recent bearish pressure surrounding the major showed some signs of exhaustion on Thursday amid weaker Crude Oil prices, which tend to undermine demand for the commodity-linked currency – Loonie. Oil prices eased a bit on Thursday and eroded a part of the overnight strong gains, which came after the EIA reported an unexpected 1.7 million barrel drop in the US inventories.

A modest USD uptick/weaker Oil prices supportive

This coupled with a modest US Dollar uptick, supported by an intraday pullback in the European currencies, further collaborated to the pair’s attempted bounce. The upside potential, however, seems limited on the back of firming market expectations that the Fed will cut interest rates again at its upcoming meeting on October 29-30, which should keep a lid on any strong USD gains.
 
Hence, it will be prudent to wait for a strong follow-through buying before confirming that the pair might have bottomed out in the near-term and positioning for any further near-term appreciating move. Later during the early North-American session, the release of durable goods orders data from the US will be looked upon to grab some short-term trading opportunities.

Technical levels to watch