USD/CAD returns above 1.3400 amid a weaker market sentiment and lower Oil prices

• The US Dollar is building up favoured by a weaker market sentiment.
• Oil prices are trading lower, increasing negative pressure on the CAD.
• Later today Canada's business outlook and manufacturing sales might give some support to the loonie.
   

The US Dollar is staging a comeback on Monday’s European session. The sourer market sentiment, with equity markets dipping to negative territory after a positive opening, and the lower oil prices are pushing the pair higher.

Investors seem to have digested the weaker-then-expected US PPI data seen on Friday, with the Greenback building up in a light trading session. The calendar is light and US stock markets are closed on bank holidays, this is leading to choppy and volatile trading.

Oil prices, Canada’s main export, are extending their reversal from Friday’s highs above $75. This is adding negative pressure on the loonie.

Later today, the Bank of Canada Business Outlook Survey and Manufacturing Sales data might give some support to the CAD. On Tuesday, Canadian CPI will be observed with attention for fresh cues on the BoC’s monetary policy ahead of Friday’s retail sales data.

In the US, the highlights of the week will be the US Retail Sales, due on Wednesday and the Michigan Consumer Sentiment Index, on Friday.

From a technical perspective, the US Dollar seems gaining bullish traction, aiming for 1.3455, the 61.8% retracement of the December sell-off. Above here, the next resistance is 1.3480 and 1.3545. Supports are 1.3375 and 1.3335.

Technical levels to watch