- USD/CAD turns lower for the second straight session amid a softer tone surrounding the USD.
- Weaker oil prices might undermine the loonie and help limit deeper losses, at least for now.
- US Consumer Confidence eyed for some impetus ahead of the first US presidential debate.
The USD/CAD pair quickly retreated around 30-35 pips from session tops and dropped to the lower end of its daily trading range, around the 1.3355 region in the last hour.
The pair failed to capitalize on its early uptick, instead witnessed a modest intraday pullback from the vicinity of the 1.3400 mark and turned lower for the second consecutive session. The downtick was exclusively sponsored by the emergence of some fresh US dollar selling during the first half of the European trading session.
The greenback extended the previous day's pullback from two-month tops and remained depressed on the back of a weaker tone surrounding the US Treasury bond yields. However, worries about a surge in new coronavirus infections and political uncertainty in the US might extend some support to the USD's safe-haven status.
Meanwhile, concerns that the ever-increasing coronavirus cases could lead to severe lockdown measures dampened prospects for a swift recovery in the fuel demand. This, in turn, weighed on crude oil price, which might undermine demand for the commodity-linked currency – the loonie – and help limit deeper losses for the USD/CAD pair.
From a technical perspective, the pair remains well within a four-day-old trading range. This further makes it prudent to wait for some strong follow-through selling before positioning for any meaningful slide as investors turn cautious ahead of the first debate between President Donald Trump and Democrat candidate Joe Biden, due later this Tuesday.
In the meantime, traders are likely to take cues from Tuesday's release of the Conference Board's US Consumer Confidence Index. This, along with speeches by influential FOMC members and the broader market risk sentiment might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
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