USD/CAD trades with modest losses, around 1.3200 mark amid rallying Oil prices
- Oil continues scaling higher amid intensifying geopolitical tensions and underpins Loonie.
- The USD remains on the defensive amid Fed rate cut bets and does little to lend any support.
The USD/CAD pair met with some fresh supply at the start of a new trading week and slipped below the 1.3200 handle, erasing Friday's modest recovery gains.
Geopolitical tensions in the Middle East escalated further after Iran shot down a US drone over the Strait of Hormuz last week and the US Secretary of State Mike Pompeo said that significant sanctions on Iran would be announced on Monday.
The latest developments helped Oil prices to extend gains from last week, which turned out to be one of the key factors underpinning demand for the commodity-linked currency - Loonie and exerting some fresh downward pressure on the major.
On the other hand, the US Dollar remained on the defensive in the wake of the latest dovish shift by the FOMC, wherein the central bank indicated that it stands ready to cut interest rates to support economic growth and combat subdued inflation pressure.
The combination of negative forces failed to assist the pair to build on Friday's goodish intraday recovery, rather dragged it back within the striking distance of multi-month lows set last week, though the downside seemed limited, at least for the time being.
There isn't any major market-moving economic data due for release either from the US or Canada and hence, the USD/Oil price dynamics might continue to act as key determinants of the pair's momentum through Monday's trading session.
Technical levels to watch
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