USD/CAD slides to 1-week lows, around mid-1.3500s

• USD/CAD witnessed some follow-through selling for the third straight session on Wednesday.
• Bullish crude oil prices underpinned the loonie and kept exerting some pressure on the pair.
• A subdued USD price action failed to lend any support ahead of US macro data, FOMC minutes.

The USD/CAD pair edged lower through the early European session and dropped to one-week lows, around mid-1.3500s in the last hour.

Having repeatedly failed to find acceptance above the 1.3700 round-figure mark, the pair witnessed a turnaround and witnessed some follow-through selling for the third consecutive session on Wednesday. The ongoing slide was sponsored by the prevalent bullish sentiment surrounding crude oil prices, which tend to underpin the commodity-linked currency – the loonie.

Oil prices rose around 2.5% on Wednesday in the wake of the overnight report, which showed crude inventories in the US fell much more than expected. The data indicated an improvement in demand despite the ever-increasing coronavirus cases globally. Oil prices were further supported by a drop in output from OPEC to the lowest level in two decades in June.

On the other hand, the US dollar struggled to attract any safe-haven flows and remained on the defensive through the first half of Wednesday trading action. Concerns about the second wave of COVID-19 infection did little to impress the USD bulls. Even a strong intraday pickup in the US Treasury bond yields also failed to revive the greenback demand.

It will now be interesting to see if the pair is able to find any support at lower levels or the ongoing slide marks the end of the recent recovery move from the vicinity of 1.3300 mark – three-month lows set earlier this month.

Market participants now look forward to the US economic docket, highlighting the release of the ADP report on private-sector employment and ISM Manufacturing PMI. This will be followed by the release of minutes of the latest FOMC policy meeting, which might influence the USD price dynamics and produce some meaningful trading opportunities.

Technical levels to watch