USD/CAD holds steady near 1.3400 mark, below multi-week tops set last week

The USD/CAD pair was placed near daily tops during the early European session, with bulls making a fresh attempt to build on the momentum beyond the 1.3400 mark.

The pair caught some fresh bids on the first day of a new week and has now moved well within the striking distance of multi-week tops set on Friday. The uptick marked the second consecutive day of a positive move and was sponsored by sliding oil prices, which tend to undermine demand for the commodity-linked currency – the loonie.

Concerns over the ever-increasing coronavirus cases largely offset hopes for a recovery in the fuel demand and weighed on oil prices. The supporting factor, to some extent, was negated by a modest US dollar pullback from two-month tops, which, in turn, might keep a lid on any runaway rally for the USD/CAD pair, at least for the time being.

Investors remain worried that the lack of any additional fiscal stimulus could halt the current US economic recovery. Adding to this, the political uncertainty in the run-up to the US Presidential election in November prompted traders to lighten their USD bullish bets ahead of the first presidential debate on Tuesday.

There isn't any major market-moving economic data due for release on Monday, either from the US or Canada. Hence, it will be prudent to wait for a sustained move beyond the 1.3420 supply zone before positioning for any further appreciating move. A sustained move above might assist the USD/CAD pair to aim back to reclaim the key 1.3500 psychological mark.

Technical levels to watch