USD/CAD clings to gains near 1.3575 area amid sliding Oil prices, modest USD strength

• USD/CAD regains positive traction on Monday and draws support from a combination of factors.
• Sliding Crude Oil prices undermines the Loonie and acts as a tailwind amid a modest USD strength.
• Traders now look to the US ISM Manufacturing PMI for some impetus ahead of the FOMC meeting.

The USD/CAD pair attracts some buyers near the 100-day Simple Moving Average (SMA) on Monday and stalls Friday's sharp retracement slide from the 1.3665-1.3670 region, or one-month high. The pair maintains its bid tone around the 1.3570-1.3575 area through the first half of the European session and for now, seems to have snapped a two-day losing streak.

Crude Oil prices struggle to capitalize on Friday's goodish rebound from a one-month low and come under renewed selling pressure amid worries that rising borrowing costs could slow economic growth, which, in turn, will hit fuel demand. Apart from this, weaker Chinese manufacturing data aggravates the bearish pressure surrounding the black liquid. This, in turn, is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair. Apart from this, a modest US Dollar (USD) strength further contributes to the bid tone surrounding the major.

The prospects for further interest rate hikes by the Federal Reserve (Fed), along with looming recession risks, push the USD higher for the third successive day on Monday. In fact, the markets have fully priced in another 25 bps lift-off at the end of the highly-anticipated two-day FOMC policy meeting on Wednesday. Furthermore, growing market concerns about economic headwinds stemming from rising borrowing costs benefit the Greenback's relative safe-haven status and provide an additional lift to the USD/CAD pair ahead of the key central bank event risk.

In the meantime, traders on Monday will take cues from the release of the US ISM Manufacturing PMI, due later during the early North American session. Apart from this, the broader risk sentiment will drive the USD demand and provide some impetus to the USD/CAD pair. This, along with Oil price dynamics, should further contribute to producing short-term trading opportunities around the major.

Technical levels to watch