USD/CAD clings to gains near session tops, comfortably above 1.3600 mark

The USD/CAD pair traded with a mild positive bias through the early European session and was last seen hovering near daily tops, around the 1.3620 region.

The pair built on the previous day's goodish intraday bounce of over 75 pips from the 1.3535 region and gained some traction on Tuesday, making its fourth consecutive day of a positive move. The uptick was sponsored by a combination of factors, including some follow-through US dollar buying and a sharp fall in crude oil prices.

The global risk sentiment took a sharp knock amid renewed concerns about escalating US-China tensions. This comes on the back of growing worries about the ever-increasing COVID-19 cases and fresh restrictions in California, which, in turn, benefitted the greenback's relative safe-haven status against its Canadian counterpart.

Meanwhile, the new lockdown measures to stem surging coronavirus cases in the US dampened prospects for a swift fuel demand recovery. This coupled with expectations that OPEC+ might ease output cuts led to a sharp fall in oil prices, which undermined the commodity-linked currency – the loonie and further extended some support to the USD/CAD pair.

Bulls now await a sustained move beyond last Friday's swing high, around the 1.3630 region, before positioning for a move towards reclaiming the 1.3700 mark. On the flip side, any pullback towards the 1.3600 mark might now be seen as a buying opportunity, which should help limit the downside near the 1.3580 horizontal support.

Market participants now look forward to the US economic docket, highlighting the release of consumer inflation figures. The data, along with the broader market risk sentiment will influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session.

Technical levels to watch