Ella 
USD/CAD maintained its modest intraday losses during early European trading on Wednesday and is currently trading around the 1.3775-1.3770 area. However, spot prices managed to hold above the two-week low hit on Tuesday, with caution needed before positioning for an extension of this week’s sharp pullback from around 1.3900 or near two-year highs.
Crude oil prices are gaining some positive traction and now appear to have ended a four-day losing streak that saw them fall to their lowest levels since early February. This supported the commodity-linked Canadian dollar and put some downward pressure on USD/CAD for the third day in a row. Still, worries about recession in the United States and China, the world’s two largest economies, remain a headwind for oil prices.
In addition to this, a good recovery in demand for the US dollar (USD), supported by rising US Treasury yields, has also become another factor supporting USD/CAD. Meanwhile, the overall positive tone in the stock market and dovish expectations from the Federal Reserve are likely to curb aggressive dollar bull bets and support the prospect of a sharp decline in spot prices.
However, without any relevant U.S. economic data to impact the market on Wednesday, the above-mentioned mixed fundamental background requires us to remain cautious before making aggressive directional bets. Traders may also prefer to stay on the sidelines ahead of Canada’s monthly employment data on Friday. Meanwhile, USD/Oil price dynamics should generate USD/CAD trading opportunities.
