USD/CAD struggles near 3-month lows, bulls trying hard to defend 200-DMA

The USD/CAD pair remained depressed near three-month lows, with bears still awaiting a sustained break below the very important 200-day SMA.

The pair continued with its struggled to register any meaningful recovery and for now, seems to have found acceptance below the key 1.3500 psychological mark amid the prevalent selling bias around the US dollar. The greenback added to its recent losses and was last seen hovering near its lowest level since mid-March. The upbeat market mood was seen as one of the key factors denting the USD's relative safe-haven status.

The global risk sentiment remained well supported by growing optimism over a sharp V-shaped economic recovery from the coronavirus pandemic and seemed unaffected by concerns about escalation US-China tensions. Relations between the world's two largest economies soured further after the US suspended passenger flights of Chinese airlines in response to the dragon nation's move to bar American carriers from re-entering China.

Meanwhile, a modest pickup in crude oil prices underpinned demand for the commodity-linked currency – the loonie – and further contributed to the weaker tone surrounding the USD/CAD pair. Oil prices regained some traction amid hopes that major oil producers (OPEC+) will agree to extend the production cuts when they meet on Saturday.

It will now be interesting to see if the USD/CAD pair continues to attract some buying near a technically significant moving average or extends the downfall to confirm a fresh near-term bearish breakdown. Friday's monthly jobs report from the US (NFP) and Canada will now be looked upon for a fresh directional impetus.

Technical levels to watch