- USD/CAD remained depressed for the second straight session amid a subdued USD demand.
- Growing optimism about the global economic recovery weighed on the safe-haven greenback.
- A modest pickup in crude oil prices underpinned the loonie and added to the selling pressure.
- Extremely oversold conditions on hourly chats might help limit deeper losses, at least for now.
The USD/CAD pair witnessed some follow-through selling through the Asian session on Tuesday and dropped to near three-month lows, around the 1.3530 region. The pair added to the previous day's heavy losses, confirming a near-term bearish break through 100-day SMA support near the 1.3700 round-figure mark and over two-month-old descending trend-channel.
The US dollar remained depressed amid growing optimism about a sharp V-shaped global economic recovery and widespread violent protests over the death of George Floyd at the hands of Minneapolis police. This coupled with the US President Donald Trump's measured response to China’s move to tighten control over Hong Kong further boosted investors' sentiment and undermined the greenback's safe-haven demand.
On the other hand, the growing possibility of an extension of OPEC production cuts led to a modest pickup in crude oil prices and extended some support to the commodity-linked currency – the loonie. This, in turn, contributed to the USD/CAD pair's ongoing slide to the lowest level since March 9.
Apart from this, Tuesday's downfall could further be attributed to some technical selling. However, extremely oversold conditions on hourly charts held investors from placing aggressive bearish bets and helped limit deeper losses for the USD/CAD pair, at least for the time being.
There isn't any major market-moving economic data due for release on Tuesday, either from the US or Canada. Hence, the USD/oil price dynamics might continue to play a key role in influencing the USD/CAD pair's momentum and produce some meaningful trading opportunities.
Technical levels to watch