USD/CAD hangs near two-week lows, below mid-1.3200s

• USD/CAD edges lower for the second consecutive session on Monday.
• Positive oil prices underpinned the loonie and exerted some pressure.
• The USD stood tall near 4-1/2 month tops and helped limit losses.

The greenback remained on the defensive against its Canadian counterpart and pushed the USD/CAD pair to fresh two-week lows on the first day of a new trading week.

The pair extended its recent retracement slide from four-month tops and witnessed some follow-through weakness for the second consecutive session on Monday, also marking its fourth day of a negative move in the previous five.

The downside seems limited

Improving global risk sentiment assisted crude oil prices to add to last week's strong gains of around 3.5%, which underpinned demand for the commodity-linked currency – the loonie and kept exerting some pressure on the major.

Oil prices were supported by expectations for further output cuts from major producers. However, concerns of falling fuel demand – caused by the economic fallout from the coronavirus outbreak in China – might cap further gains.

Meanwhile, investors looked past Friday's mixed US macro data and helped the US Dollar Index to hold steady well within the striking distance of 4-1/2 month tops, above the 99.00 mark, which might help limit deeper losses.

Hence, it will be prudent to wait for some strong follow-through selling, possibly below the very important 200-day SMA, before positioning for any further near-term depreciating move amid absent relevant market-moving economic data.

Technical levels to watch