USD/CAD slips below mid-1.3000s, fresh 3-month lows

• The USD remained on the defensive amid sliding US bond yields.
• Weaker Crude Oil prices did little to lend any support to the major.
• The downside seems limited ahead of FOMC/BoC on Wednesday.

The USD/CAD pair quickly retreated around 30 pips from daily tops and dropped to fresh three-month lows, below mid-1.3000s in the last hour.
 
The pair failed to capitalize on its attempted intraday bounce and met with some fresh supply near the 1.3070 region despite some strong follow-through weakness in Crude Oil prices, which tend to undermine demand for the commodity-linked currency – Loonie.

Weaker oil prices fail to impress bulls

Oil prices remained under pressure for the second straight session on Tuesday amid growing concerns about slowing global economic growth. Adding to this, comments by Russian Deputy Energy Minister Pavel Sorokin, calling talk about deeper production cuts by OPEC and its allies premature, further collaborated to the weaker tone surrounding the Oil markets.
 
Bullish traders, however, seemed rather unimpressed by the ongoing slide in oil prices amid a subdued US Dollar demand. Against the backdrop of firming Fed rate cut expectations, a sharp intraday fall in the US Treasury bond yields kept the USD bulls on the defensive and did little to lend any support to the major.
 
Meanwhile, slightly oversold conditions on short-term charts seemed to be the only factor holding investors from placing any aggressive bearish bets and might help limit deeper losses ahead of Tuesday's important US macro data – the Conference Board's Consumer Confidence Index.
 
Hence, any subsequent slide seems more likely to find decent support near July swing lows, around the 1.3020-15 region, warranting some caution before positioning for any further near-term depreciating move heading into Wednesday's key event risks – the BoC monetary policy update and the highly anticipated FOMC decision.

Technical levels to watch