USD/CAD retreats back to the lower end of a 5-day-old trading range

• USD continues to be weighed down by reviving US-China trade war fears.
• A modest recovery in oil prices underpin Loonie and exert additional pressure.

The USD/CAD pair traded with a negative bias through the early European session on Tuesday and slipped back to the lower end of a five-day-old trading range.

The pair extended overnight rejection slide from the 1.2940-50 heavy supply zone and was now being weighed down by some renewed US Dollar weakness, led by reviving worries over a possible escalation of the US-China trade dispute.

This coupled with a modest uptick in crude oil prices underpinned the commodity-linked currency - Loonie and further collaborated to the pair's retracement slide back below the 1.2900 handle.

It would now be interesting to see if the pair is once again able to find some buying interest near the 1.2860 region or finally breaks down of the near-term trading range. Traders now look forward to this week's important macroeconomic releases, including the keenly watched NFP, for some fresh directional impetus.

Technical levels to watch

Any subsequent weakness below 1.2860 area is likely to get extended towards the 1.2815-10 support, which if broken might turn the pair vulnerable to extend the downfall further towards 50-day SMA support near the 1.2720 region.

On the upside, any up-move back above the 1.2900 handle might continue to confront heavy supply near the 1.2940-50 area, above which a fresh bout of short-covering has the potential to lift the pair further towards the key 1.30 psychological mark.

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