USD/CAD climbs back closer to 1.3500 amid softer Oil prices, broad-based USD strength

The USD/CAD pair rejects Friday's shooting-star bad omen and attracts fresh buying near the 1.3445-1.3440 horizontal support zone during Tuesday's European Session.

Bears ignored the rallying call from the previous day's downfall and have handed the advantage to bulls who are poised for a sustained move beyond the 1.3500 psychological mark before placing fresh bets.

The commodity-linked Canadian Dollar came under pressure from falling Crude Oil prices caused by worries that rapidly rising borrowing costs will dampen economic growth and dent fuel demand.

Combined with sustained US Dollar buying, this provides a goodish lift to the USD/CAD pair and remains supportive of the intraday positive move.

The USD remains well within the striking distance of a six-week high touched last Friday and continues to draw support from expectations that the Fed will stick to its hawkish stance. 

Markets are pricing in at least a 25 bps lift-off at the next two FOMC meetings in March and May, which pushes the US Treasury bond yields higher and underpins the buck.

Apart from this, the cautious market mood - amid looming recession risks and geopolitical tensions - further benefits the Greenback's relative safe-haven status.

The USD/CAD pair, however, remains below the key 1.3500 mark as traders seem reluctant ahead of monthly Canadian consumer inflation figures, due for release later during the early North American session.

Traders will also take cues from the flash US PMI prints out later today, which, along with the US bond yields and the broader risk sentiment, will drive the USD demand.

Apart from this, Oil price dynamics should enable traders to grab short-term opportunities around the USD/CAD pair; the focus, however, will remain glued to the FOMC monetary policy meeting minutes on Wednesday.

Technical levels to watch