USD/CAD stages a goodish bounce from monthly lows, back near mid-1.3200s

• USD/CAD regains positive traction on Tuesday and rebounds from monthly lows.
• Weaker oil undermined the loonie; stronger USD provided an additional boost.
• Investors now eye second-tier US/Canadian macro data for some trading impetus.

The USD/CAD pair maintained its bid tone through the early European session and is currently placed near the top end of its daily trading range, just above mid-1.3200s.

A combination of supporting factors helped the pair to catch some fresh bids on Tuesday and snap two consecutive days of losing streak. The pair staged a goodish rebound from the very important 200-day SMA and for now, seems to have stalled its recent pullback from four-month tops.

USD/CAD supported by a combination of factors

Continuous worries over the economic impact of the coronavirus outbreak exerted some pressure on crude oil prices, which undermined demand for the commodity-linked currency – the loonie – and was seen as one of the key factors driving the pair higher on Tuesday.

On the other hand, the US Dollar Index stood stall near 4-1/2 month tops, set last Friday and benefitted further from a softer tone around equity markets. Stronger USD provided an additional boost and assisted the pair to erase the previous session’s negative move to monthly lows.

It will now be interesting to see if the pair is able to capitalize on the positive momentum or runs out of the steam at higher levels amid relatively thin economic docket on Tuesday, highlighting the release of the Empire State Manufacturing Index from the US and monthly Manufacturing Sales data from Canada.

Technical levels to watch