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  • A combination of factors prompted some fresh selling around USD/CAD on Monday.
  • The prevalent upbeat market mood drove flows away from the safe-haven greenback.
  • Rallying oil prices underpinned the loonie and further contributed to the offered tone.

The USD/CAD pair remained depressed through the early European session and dropped to two-week lows, around the 1.3265 region in the last hour.

The pair failed to capitalize on the previous session’s modest gains and met with some fresh supply on the first day of a new week, marking the third day of a negative move in the previous four. The downtick was sponsored by a combination of factors, including a mildly weaker tone surrounding the US dollar and a goodish pickup in crude oil prices.

Positive news about US President Donald Trump’s coronavirus infection boosted investors’ confidence and triggered a fresh wave of the global risk-on trade. The upbeat market mood undermined the greenback’s relative safe-haven status, which, in turn, was seen as one of the key factors exerting pressure on the USD/CAD pair.

Trump’s health update eased some of the political uncertainty helped offset concerns over risking oil supply in the market. Oil prices rallied around 3% for the day, which underpinned the commodity-linked currency – the loonie – and further contributed to the USD/CAD pair’s downtick through the first half of the trading action on Monday.

Market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI. This, along with the broader market risk sentiment, might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch