USD/CAD under pressure below mid-1.3200s, downside seems limited
|- USD/CAD remains depressed for the second straight session on Tuesday.
- Optimism over USMCA and subdued USD demand exerted some pressure.
- The downside remains cushions amid a slightly weaker ton around oil prices.
The USD/CAD pair traded with a negative bias for the second consecutive session on Tuesday, albeit has still managed to hold its neck comfortably above the 1.3200 handle.
The pair failed to capitalize on Friday's upsurge of nearly 100 pips and witnessed a modest pullback on the first day of a new trading week amid some renewed selling bias surrounding the US dollar.
Apart from the USD weakness, a sudden pickup in crude oil prices provided an additional boost to the commodity-linked currency – loonie and further collaborated to the pair's overnight downtick.
The bid tone around the Canadian dollar strengthened further on news that lawmakers and the Trump administration were nearing an agreement on the proposed North American trade rewrite.
According to reports, the White House and the House Democrats are approaching a deal that would pave the way to the passage of the US-Mexico-Canada Agreement through the lower chamber of Congress.
Meanwhile, the downside remained cushioned, at least for the time being, amid weaker oil prices and reluctance to place any aggressive bets ahead of the highly anticipated FOMC decision on Wednesday.
Hence, it will be prudent to wait for some strong follow-through selling before traders again start positioning for any further near-term appreciating move amid absent relevant market moving economic releases.
Technical levels to watch
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