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  • USD/CAD remained depressed for the third consecutive session on Wednesday.
  • The upbeat market mood continued denting demand for the safe-haven USD.
  • Bullish oil prices underpinned the loonie and added to the pair’s weaker tone.
  • The downside remained cushioned near 200-DMA ahead of BoC policy update.

The USD/CAD pair broke out of its Asian session consolidation phase and refreshed daily tops, around the .3530 region in the last hour, 

The pair added to this week’s heavy losses and dropped to an intraday low level of 1.3480 on Wednesday – the lowest level since early March. The downtick was sponsored by a combination of factors, including the prevalent US dollar selling bias and the ongoing bullish run in crude oil prices.

The easing of lockdown restrictions in major economies fueled hopes for a sharp V-shaped recovery for the global economy. The optimism persisted despite heightened concerns over US-China tensions and civic unrest across the US over the death of a black man in police custody.

The upbeat market mood was evident from a bullish sentiment around the equity markets and kept the safe-haven USD under pressure through the early part of Wednesday’s trading action.

On the other hand, some follow-through pickup in crude oil prices, gaining around 2.5% for the day to hit a three-month high, underpinned the commodity-linked currency – the loonie. Oil prices remained supported by a potential extension of record production curbs by OPEC+.

Despite the negative factors, the USD/CAD pair managed to rebound from the vicinity of the very important 200-day SMA. Oversold conditions seemed to be the only factor prompting some short-covering ahead of Wednesday’s monetary policy update by the Bank of Canada.

Apart from the BoC decision, traders will confront the release of the ADP report on private-sector employment and ISM Non-Manufacturing PMI from the US. The macro data will influence the USD price dynamics and further contribute to produce some meaningful trading opportunities.

Technical levels to watch