USD/CAD quickly reverses a dip to sub-1.3300 level
• The USD remains on the back-foot amid Fed rate pause talks.
• Subdued oil price action helped limit deeper losses, for now.
The USD/CAD pair remained under some selling pressure at the start of a new trading week, albeit quickly recovered around 20-25 pips from sub-1.3300 level touched in the last hour.
On Friday, the pair witnessed a sharp retracement on the back of stellar Canadian employment details, showing that the number of employed people unexpectedly rose by a whopping 94.1K in November - the highest since at least 1989 and probably the best ever.
This coupled with some renewed US Dollar selling, led by disappointing US monthly jobs report for Nov. and dovish comments by the Fed Governor Lael Brainard and St. Louis Fed President James Bullard further aggravated the selling pressure.
The pair tumbled nearly 150-pips intraday but managed to find some support ahead of mid-1.3200s amid a late pull-back in crude oil prices, which turned out to be one of the key factors that dampened demand for the commodity-linked currency - Loonie.
The attempted recovery, however, lacked any follow-through on Monday, rather was sold into amid a subdued USD demand. Meanwhile, a consolidative price action around oil markets also did little to influence the momentum, albeit helped limit deeper losses at least for the time being.
It would now be interesting to see if the pair is able to find any buying interest at the lower levels or the current pull-back marks the end of the recent bullish trajectory to near 18-month tops, set last Thursday, in absence of any major market moving economic releases.
Technical levels to watch
On a sustained weakness back below the 1.3300 handle, the pair is likely to head back towards challenging the 1.3255-50 support are before eventually dropping further towards the 1.3200 round figure mark. On the flip side, the 1.3330-35 region now seems to act as an immediate resistance, above which the recovery could further get extended towards the 1.3380 supply zone.