USD/CAD clings to daily gains, comfortably above mid-1.3500s

The USD/CAD pair maintained its bid tone through the early North American session and was last seen hovering near the top end of its daily trading range, comfortably above mid-1.3500s.

Having found some support near the 1.3525-20 region, the pair managed to regain some positive traction on Tuesday and for now, seems to have stalled its recent pullback from levels beyond the 1.3700 mark. The intraday positive move was supported by a combination of factors – a modest pickup in the US dollar demand and a negative tone surrounding crude oil prices.

The greenback built on the previous day's rebound that followed the release of upbeat US ISM Non-Manufacturing PMI and edged higher through the first half of the trading action on Tuesday. Worries about the continuous surge in coronavirus cases across the world dented the global risk sentiment and benefitted the greenback's relative safe-haven status.

Meanwhile, investors remain concerned that renewed lockdown measures to contain the spread would once again put breaks on the economic activity, which will eventually limit recovery in fuel demand. This was evident from a modest pullback in oil prices, which undermined the commodity-linked currency – the loonie and remained supportive of the USD/CAD pair's uptick.

With Tuesday's move up, the pair has now erased a major part of its losses recorded over the past three trading session. A subsequent strength beyond the 1.3600 round-figure mark will be seen as a fresh trigger for bullish traders and pave the way for additional gains.

In the absence of any major market-moving economic releases, either from the US or Canada, the USD/CAD pair remains at the mercy of the USD/oil price dynamics. This coupled with developments surrounding the coronavirus saga will influence the broader market risk sentiment and produce some meaningful trading opportunities.

Technical levels to watch