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  • USD/CAD extends previous day’s pullback from three-week top to refresh intraday low.
  • US dollar’s weakness joins WTI’s gains to please the sellers.
  • Market sentiment fails to keep US-session recovery moves ahead of the key events.

USD/CAD drops to 1.3139, down 0.05% on a day, as the European traders prepare for Thursday’s expectedly volatile day. The pair took a U-turn from multiday high to snap the two-day winning streak after Bank of Canada (BOC) suggested an extended period of low-interest rates. The bears got additional strength from the oil price recovery and the US dollar’s broad weakness before important events, including a speech from the BOC Governor Tiff Macklem.

Global markets are mildly offered amid pessimism surrounding the Brexit and hopes of further US-China tussle. The same weigh on the US dollar while news of higher OPEC+ compliance helps WTI to extend previous recovery moves.

The BOC left its key rate unchanged at 0.25% at its September policy meeting. The policy statement said, “Inflation is expected to remain well below target in the near term.” Even so, the market’s optimism towards upbeat economic forecasts from the European Central Bank (ECB) joined recovery in technology shares to fetch the US dollar index (DXY) back from a one-month high while also snapping its six-day rise.

Elsewhere, oil prices ignored higher than previous inventory reports from the private data provider American Petroleum Institute (API) on Wednesday. The reason could be traced from the commodity’s inverse relations with the greenback and in-line trend with the Canadian dollar (CAD).

Moving on, traders will keep eyes on the European Central Bank (ECB) decision and headlines from London for intermediate moves ahead of 16:30 GMT speech by BOC’s Macklem. The Canadian central banker is to speak about the uneven effects of COVID-19 on the economy at the Canadian Chamber of Commerce. Though, traders await extra details of the previous day’s BOC moves, actually inaction.

Technical analysis

Unless declining back below a descending trend line from March, at 1.3130 now, buyers can keep a 50-day EMA level of 1.3300 on their radars while respecting the previous day’s break of the key resistance line, now immediate support.