USD/CAD trades with modest losses below 1.3400

• USD/CAD is edging lower following last week’s slump.
• US Dollar Index plummets below 94.00 ahead of US Durable Goods Orders data.
• WTI continues to fluctuate in narrow range above $41.

The USD/CAD pair closed the previous week 1.23% lower pressured by the broad-based USD weakness. At the start of the new week, the pair struggled to make a meaningful recovery and continued to push lower. As of writing, USD/CAD was down 0.28% on a daily basis at 1.3373.

Focus shifts to FOMC

Last week, the US Dollar Index (DXY) lost 1.75% and posted its lowest weekly close since September of 2018. Although the market mood remained sour throughout the week, the greenback failed to capitalize on risk-off flows hurt by the sharp drop witnessed in the US Treasury bond yields.

Additionally, macroeconomic data releases from the US point out to a sluggish recovery, causing investors to price a long-term dovish outlook from the Fed. On Wednesday, the FOMC will conclude July’s monetary policy meeting and release its policy statement alongside the rate decision. At the moment, the DXY is down 0.57% on the day at 93.80.

On the other hand, crude oil continues to trade in a relatively tight range, allowing the USD’s performance to stay as the primary driver of USD/CAD’s movements. The barrel of West Texas Intermediate was last seen trading at $41.30, where it was virtually unchanged on a daily basis.

Later in the session, Durable Goods Orders and Dallas Fed Manufacturing Index data will highlight the US economic docket.

Technical levels to watch for