USD/CAD slides further below mid-1.2800s amid softer USD, rising oil prices ahead of OPEC+

• USD/CAD witnesses an intraday turnaround from a one-week high touched earlier this Wednesday.
•  A pickup in crude oil prices underpins the loonie and exerts pressure amid modest USD weakness.
• Rising US bond yields could lend some support to the USD and limit any further losses for the pair.

The USD/CAD pair attracts some selling in the vicinity of the 1.2900 mark on Wednesday and stalls this week's recovery move from its lowest level since June 10. The pair continues losing ground through the mid-European session and drops to the 1.2835 region in the last hour, snapping a two-day winning streak to a one-week high.

The US dollar struggles to capitalize on the overnight bounce from a multi-week low and meets with a fresh supply, which, in turn, exerts some downward pressure on the USD/CAD pair. A goodish recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - is weighing on the safe-haven greenback.

Apart from this, a goodish pickup in crude oil prices undermines the commodity-linked loonie and also contributes to the offered tone surrounding the USD/CAD pair. Expectations that OPEC+ producers would keep output steady - amid fears that a slowdown in global growth will hit fuel demand - turn out to be a key factor boosting crude oil prices.

That said, indications that the current tight supply is abating could act as a headwind for crude oil prices. Apart from this, some follow-through rise in the US Treasury bond yields, bolstered by the overnight hawkish comments by several Fed officials, could revive the USD demand and help limit any further losses for the USD/CAD pair.

Investors might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of this week's important macro releases. The closely-watched monthly employment details from the US and Canada are scheduled on Friday. The NFP report, especially, would influence the USD and provide a fresh directional impetus to the USD/CAD pair.

In the meantime, traders on Wednesday would take cues from the US ISM Services PMI. This, along with the US bond yields and the broader risk sentiment, would drive the USD demand. Traders would further take cues from the headlines coming out of the OPEC+ meeting and oil price dynamics to grab short-term opportunities around the USD/CAD pair.

Technical levels to watch