USD/CAD seems vulnerable near multi-week low, below 1.3600 amid bullish Oil prices

• USD/CAD drops to over a three-week low, though lacks strong follow-through.
• Bullish Crude Oil prices continue to underpin the Loonie and exert pressure.
• A modest USD strength lends some support to the pair and helps limit losses.

The USD/CAD pair turns lower for the third straight day following an early uptick to the 1.3615 area on Wednesday and drops to its lowest level since early March heading into the North American session. The pair, however, manage to bounce a few pips in the last hour and currently trades with only modest intraday losses, just below the 1.3600 round-figure mark.

Crude Oil prices prolong a three-day-ole bullish trend and climb to over a two-week high, which, in turn, is seen underpinning the commodity-linked Loonie and exerting some downward pressure on the USD/CAD pair. A halt to some exports from Iraq's Kurdistan region raised concerns about tightening global supplies. This, along with hopes for a strong fuel demand recovery in China, continues to support Oil prices amid a drop in US crude inventories.

In fact, market sources, citing American Petroleum Institute figures on Tuesday, suggested that Crude stocks in the US fell by 6.1 million barrels last week. Investors now look to the official US inventory data from the Energy Information Administration to see if it confirms the Crude stock decline. In the meantime, easing fears of a full-blown banking crisis remains supportive of the prevalent risk-on environment and lends additional support to the black liquid.

That said, the emergence of some US Dollar (USD) buying lends some support to the USD/CAD pair and limits the downside, at least for the time being. The USD uptick, meanwhile, lacks any obvious fundamental catalyst and runs the risk of fizzling out rather quickly in the wake of the Federal Reserve's (Fed) less hawkish outlook. In fact, the US central bank signalled last week that a pause to interest rate hikes was on the horizon amid the recent banking turmoil.

This, along with a fresh leg down in the US Treasury bond yields and a generally positive tone around the equity markets, keeps a lid on any meaningful gains for the safe-haven Greenback. The fundamental backdrop suggests that the path of least resistance for the USD/CAD pair is to the downside. The negative outlook is reinforced by the overnight breakdown below the 1.3630 support. Hence, any attempted recovery move might still be seen as a selling opportunity.

Technical levels to watch