• USD/CAD failed to capitalize on the overnight intraday positive move.
  • Monday’s weaker US data, trade uncertainty weighed on the USD.
  • Positive oil prices underpinned the loonie and added to the selling bias.

The USD/CAD pair came under some renewed selling pressure on Tuesday and eroded a major part of the previous session's positive move.

The pair continued with its struggle to make it through a resistance marked by a six-month-old descending trend-line and once again started retreating from the top end of a broader trading range held over the past two weeks or so.

Weighed down by a combination of factors

The US dollar remained on the defensive and continued to be weighed down by Monday's disappointing release of the US ISM Manufacturing PMI, which recorded the fourth consecutive month of contraction in November.

Adding to this, persistent uncertainty over a potential US-China trade deal further collaborated to a weaker tone surrounding the greenback and kept a lid on the pair's intraday positive move on the first day of a new week.

It is worth mentioning that the US President Donald Trump on Monday re-imposed tariffs on steel and aluminium from Brazil and Argentina. Adding to this, the US Secretary of Commerce Wilbur Ross reiterated that Trump is willing to increase tariffs on Chinese goods if there is no deal.

Apart from this, a goodish pickup in crude oil prices underpinned demand the commodity-linked currency – loonie and also played its part towards exerting some additional downward pressure on the major.

Oil prices remained well support through the early European session on Tuesday in the wake of reports that OPEC and its allies are discussing a plan to increase the existing supply cut by 400,000 bpd and extend it until June.

It will now be interesting to see if the pair continues to show some resilience and attract some dip-buying interest below the very important 200-day SMA amid absent relevant market-moving economic releases, either from the US or Canada.

Technical levels to watch