USD/CAD hangs near multi-week lows, just below 1.3400 mark

• The heavily offered tone surrounding the USD exerted some fresh pressure on USD/CAD.
• A modest pullback in oil prices might undermine the loonie and help limit deeper losses.

The USD/CAD pair remained depressed through the early European session and was last seen hovering near the lower end of its daily trading range, around the 1.3385 region.

The pair came under some renewed selling pressure on the first day of a new trading week and moved back closer to six-week lows set last Thursday amid the heavily offered tone surrounding the US dollar. Growing market concerns that the economic recovery in the US could be grinding to a halt amid the resurgence in coronavirus cases continued exerting downward pressure on the greenback.

Adding to this, intensifying US-China tensions now seemed to fuel speculations that the Fed would add more stimulus for a longer period of time and in bigger quantities to support the economy. This was evident from the ongoing downfall in the US Treasury bond yields, which further undermined the sentiment surrounding the greenback and contributed to the USD/CAD pair's offered tone.

Meanwhile, a modest pullback in crude oil prices kept a lid on any strong gains for the commodity-linked currency – the loonie. This, in turn, might hold investors from placing any aggressive bearish bets and help limit deeper losses, at least for the time being. Hence, it will be prudent to wait for some strong follow-through selling before positioning for any further depreciating move.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders. The data might influence the USD price dynamics and produce for some short-term trading opportunities later during the early North American session.

Technical levels to watch