USD/CAD bounces off 4-week lows, still in the red below 1.3300 handle

   •  The ongoing upsurge in oil prices continues to underpin the Loonie.
   •  Modest USD rebound/surging bond yields helped limit deeper losses.
   •  Canadian trade data eyed for some impetus ahead of Wednesday’s key events.

The USD/CAD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band, near four-week lows. 

The pair extended last week's sharp retracement from the 1.3660-65 supply zone, or over 19-month tops, and traded with a negative bias for the fifth consecutive session on Tuesday, albeit now seems to have found some support ahead of mid-1.3200s.

Against the backdrop of OPEC-led supply cuts, the latest optimism over a possible US-China trade deal fueled the ongoing upsurge in crude oil prices and underpinned the commodity-linked Loonie, which was seen exerting some pressure on the major.

However, a goodish pickup in the US Treasury bond yields helped ease the recent bearish pressure surrounding the US Dollar, rather helped revive some demand and eventually extended some support to limit further downside, at least for the time being.

Adding to this, highly oversold conditions on hourly charts could also be one of the factors holding traders from placing any aggressive bets ahead of the US President Donald Trump's address to the nation, over the border wall and the government budget impasse.

In the meantime, today's important release of Candian trade balance data will be looked upon for some short-term trading impetus but the key focus will be on the BoC monetary policy update, which along with the latest FOMC meeting minutes, both due on Wednesday, would provide some fresh directional impetus.

Technical levels to watch

The 1.3260-50 region might continue to protect the immediate downside, below which the pair is likely to accelerate the fall further towards challenging the 1.3200 round figure mark. On the flip side, any attempted recovery beyond the 1.3300 handle might now confront some fresh supply near the 1.3320 region, which if cleared might trigger a short-covering bounce in the near-term.