USD/CAD in search of a firm direction, flat-lined above 1.3100 mark

The USD/CAD pair refreshed daily lows, around the 1.3280 region during the early North American session, albeit quickly recovered few pips thereafter.

The pair witnessed some selling on the last trading day of the week and extended the previous session's late pullback from the vicinity of the 1.3400 mark, or one-month tops. The downtick was exclusively sponsored by a modest US dollar pullback, though the prevalent bearish sentiment surrounding oil prices undermined the commodity-linked currency – the loonie – and helped limit deeper losses.

Despite concerns about the potential economic fallout from the ever-increasing coronavirus cases, the USD bulls refrained from placing fresh bets amid the uncertainty about the outcome of the US presidential election. However, the prevalent risk-off environment continued lending some support the greenback's safe-haven status and helped limit any meaningful downside for the USD/CAD pair, at least for the time being.

On the other hand, the Canadian dollar got a minor lift following the release of stronger-than-expected domestic GDP figures for August. This, however, was largely offset by the ongoing decline in crude oil prices. investors remain worried that the imposition of fresh restrictions to curb the second wave of COVID-19 infection could hurt fuel consumption and dragged crude oil prices to multi-month lows.

Meanwhile, the USD/CAD pair quickly recovered around 35 pips from daily lows and was last seen trading with only modest losses, above the 1.3300 round-figure mark. Nevertheless, the pair still seems poised to end the week with strong gains, albeit a move beyond the 1.3400 level still seems elusive.

Technical levels to watch