USD/CAD struggles near 1-week lows, below mid-1.4000s

• USD/CAD remained under some heavy selling for the second straight session on Tuesday.
• Positive oil prices undermined the loonie and exerted some pressure amid weaker USD.

The USD/CAD pair maintained its offered tone through the early European session and is currently placed near one-week tops, around the 1.4030 region.

The pair witnessed some follow-through selling for the second consecutive session on Tuesday and was being weighed down by a combination of factors – a modest US dollar pullback and positive crude oil prices.

The latest optimism over a slowdown in the number of new coronavirus cases in the United States, Italy and Spain supported risk sentiment, which eventually dented the USD’s perceived safe-haven demand.

The risk-on mood was further reinforced by some strong follow-through upsurge in the US Treasury bond yields, albeit did little to impress the USD bulls or ease the prevailing bearish sentiment around the pair.

On the other hand, a goodish pickup in crude oil prices underpinned demand for the commodity-linked currency – the loonie – and contributed to the pair’s slide to the vicinity of the key 1.40 psychological mark.

Oil prices rallied around 4% on Tuesday in the wake of firming expectations that the world’s biggest producers will agree to cut output amid a sharp drop in the global demand and deepening supply glut.

Meanwhile, growing market concerns over the economic fallout from the coronavirus pandemic might continue to benefit the USD’s status as the global reserve currency and help limit deeper losses.

As investors look for additional signs of a peak in the coronavirus pandemic, it will be interesting to see if the pair is able to find any support at lower levels or continues with its ongoing bearish trajectory.

Technical levels to watch