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  • USD/CAD was seen consolidating recent losses to the lowest level since October 2018.
  • The USD remained depressed amid hopes for US fiscal stimulus and Fed policy easing.
  • Bullish oil prices underpinned the loonie and capped any meaningful upside for the pair.
  • Friday’s monthly jobs report from the US and Canada eyed for a fresh trading impetus.

The USD/CAD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a range near mid-1.2800s.

The pair struggled to register any meaningful recovery and remained depressed near the lowest level since October 2018 through the first half of the trading action on Friday. Oversold conditions on short-term charts helped limit the downside, though a combination of factors kept a lid on the Asian session bounce to the 1.2875 region.

The US dollar languished near a two-and-a-half-year low amid increasing bets for a new US coronavirus relief package and further monetary easing by the Fed. This, along with the latest optimism over the rollout of a vaccine for the highly contagious coronavirus diseases, further dented the greenback’s relative safe-haven status.

On the other hand, the prevalent bullish sentiment surrounding crude oil prices underpinned demand for the commodity-linked loonie and further collaborated towards capping the upside for the USD/CAD pair. In fact, WTI rallied to fresh multi-month tops after major oil producers agreed to cut production by 500,000 barrels per day from January 2021.

Despite the negative forces, bearish traders refrained from placing fresh bets, rather preferred to wait on the sidelines ahead of Friday’s release of monthly employment details from the US and Canada. The Canadian jobs report is likely to be overshadowed by the US NFP, which will influence the USD price dynamics and provide a fresh impetus to the USD/CAD pair.

Technical levels to watch