USD/CAD retreats from two-month high, once again fails to find acceptance above 1.3200

• USD/CAD gains some positive traction and hits a two-month high on Thursday.
• A fresh leg up in oil prices undermines the loonie and offers support to the pair.
• Subdued USD demand fails to impress bulls or provide any meaningful impetus.

The USD/CAD pair climbs to a two-month high during the early North American session and looks to build on the momentum beyond the 1.3200 round-figure mark.

A fresh leg down in crude oil prices undermines the commodity-linked loonie and turns out to be a key factor pushing the USD/CAD pair higher. Concerns that a deeper global economic downturn will dent fuel demand overshadow worries about tight supply and weigh on the black liquid.

The US dollar, on the other hand, struggles to gain traction and moves little in reaction to the mixed US macro data, though remains well supported by hawkish Fed expectations. This is seen as another factor acting as a tailwind wind for the USD/CAD pair and favours bullish traders.

That said, repeated failures to build on the momentum beyond the 1.3200 mark constitutes the formation of multiple-tops on short-term charts. This makes it prudent to wait for strong follow-through buying placing fresh bullish bets around the USD/CAD pair and positioning for any further gains.

Nevertheless, the fundamental backdrop suggests that the path of least resistance is to the upside. Traders, however, might prefer to move to the sidelines ahead of next week's FOMC meeting, which will influence the USD price dynamics and provide a fresh directional impetus to the USD/CAD pair.

Technical levels to watch