USD/CAD Price Analysis: Bulls have the upper hand above 1.3400, 23.6% Fibo. level

• USD/CAD climbs to over a one-week high and draws support from a combination of factors.
• Bearish oil prices undermine the Loonie and act as a tailwind amid sustained USD buying.
• Sustained strength beyond the 1.3400 mark might have set the stage for additional gains.

The USD/CAD pair builds on last week's bounce from the 100-day SMA support, or a two-month low, and gains some follow-through traction on Monday. The pair maintains its bid tone through the early North American session and is currently trading near a one-and-half-week high, just below mid-1.3400s.

Crude oil prices languish near the lowest level since September 28 amid concerns that the worsening COVID-19 situation in China will dent fuel demand. This, in turn, undermines the commodity-linked Loonie and acts as a tailwind for the USDCAD pair amid the ongoing US Dollar recovery from a three-month low.

From a technical perspective, sustained strength beyond the 23.6% Fibonacci retracement level of the corrective slide from over a two-year peak could be seen as a trigger for bullish traders. This, in turn, remains supportive of the intraday positive move and supports prospects for a further near-term appreciating move.

That said, oscillators on the daily chart - though have been recovering from the negative territory - are yet to confirm a bullish bias and warrants caution. Hence, any subsequent move up might attract some sellers near the 1.3500 psychological mark and remain capped near the 50-day SMA support breakpoint, around mid-1.3500s.

On the flip side, the 1.3400 resistance breakpoint now seems to protect the immediate downside. The next relevant support is pegged near the 1.3325 region. This is closely followed by the 1.3300 mark, which if broken might expose the 100 DMA support, currently around the 1.3255-1.3250 area, or the monthly low touched last week.

USD/CAD daily chart

Key levels to watch