The USD/CAD pair attracts some buying for the third successive day on Monday and maintains its bid tone through the early European session. The pair is currently placed around the 1.3635 region and might now be looking to build on its bounce from levels just below the 1.3500 psychological mark, or over a one-month low touched last Thursday.

Crude oil prices come under some selling pressure on Monday after weaker-than-expected Chinese business activity data revives fears about a deeper global economic downturn and slowing fuel demand. This, in turn, undermines the commodity-linked loonie and is seen as a key factor acting as a tailwind for the USD/CAD pair amid a modest US dollar strength.

The price is testing a key horizontal resistance area currently and should this hold, a break of the support structure will open the prospects of a move towards 1.3200 for the week ahead.

Meanwhile, the hourly coil needs to give yet there is little sign of that happening any time soon. The price may need to test deeper to the upside although a break of 1.3660 will likely seal the deal for an imminent move lower.

Despite bouncing off monthly support near 1.3500, the USD/CAD pair’s upside needs validation from a two-week-old resistance line, currently around 1.3730 by the press time.

Adding to this, expectations of tight supply should limit any deeper losses for crude oil prices and further contribute to capping gains for the USD/CAD pair. In the absence of any major market-moving economic releases, either from the US or Canada, the mixed fundamental backdrop warrants some caution before positioning for any further intraday gains.

1.37748 - 1.38566 Order Block can cause strong bearish momentum

Oct 31 2022