USD/CAD flirting with monthly lows below 1.3600 handle

The USD/CAD pair maintained its offered tone for the third consecutive session and is currently placed at near 3-week lows, around 1.3580-85 region.

Persistent greenback selling pressure, with the key US Dollar Index plunging to its lowest level since the US Presidential election, has been the key factor driving the pair lower. The buck remained under intense selling pressure on Wednesday in wake of escalating worries over political instability in the US. 

Adding to this, the incoming US economic data continues to dampen expectations of additional Fed rate-hike moves through 2017 and further collaborated to the strong bearish sentiment surrounding the greenback. 

Meanwhile, a modest pull-back in oil prices, which derives demand for the commodity-linked currency - Loonies, seems to be lending some immediate support, at least for the time being. In fact, WTI crude oil dropped closer to $48.00/barrel mark on the back of eroding risk-appetite and Tuesday's API report that showed US oil inventories rose by 882k barrels last week, eventually helping the pair to hold just above monthly lows touched in the previous session.

On the economic data front, the Canadian Manufacturing Sales data would remain grab spotlight during early NA session. Later during the day, the official domestic oil inventories data by the EIA would also be in focus and should provide some impetus for short-term traders.

Technical levels to watch

From current levels, 1.3560 level (yesterday's low) might act as immediate support, which if broken would turn the pair vulnerable to accelerate the slide further towards testing the key 1.3500 psychological mark. On the flip side, sustained recovery move beyond the 1.3600 handle, leading a subsequent strength beyond 1.3618-20 region (session tops), might trigger a short-covering bounce towards mid-1.3600s, en-route the 1.3700 handle.