USD/CAD sits near session tops, bulls await a sustained move beyond 1.3900 mark

• USD/CAD quickly reversed the Fed’s emergency rate cut-led early fall.
• Sliding crude oil prices undermined the loonie and helped regain traction.
• Some heavy selling around the USD might keep a lid on any further gains.

The USD/CAD pair refreshed session tops in the last hour, albeit struggled to sustain/build on the momentum further beyond the 1.3900 round-figure mark.

Following a bullish gap opening on the first day of a new trading week, the pair witnessed some aggressive selling during the early Asian session and dived to an intraday low level of 1.3729 following the Fed's emergency decision to cut rates to zero.

However, a fresh leg down in crude oil prices, now down over 5% for the day, undermined demand for the commodity-linked currency – the loonie. This assisted the pair to attract some strong dip-buying and rally nearly 200 pips from daily swing lows.

Oil prices added to last week's plunge of 25% amid growing concerns about the coronavirus pandemic, oversupply fears and a price war between top producers, especially after Saudi Arabia ramped up output and slashed prices last week.

Meanwhile, the strong intraday bounce seemed rather unaffected by the prevalent selling bias surrounding the US dollar, though seemed to be the only factor holding investors from placing aggressive bullish bets and capping strong gains, at least for now.

As investors await fresh developments around the coronavirus saga, it will be prudent to wait for some strong follow-through buying before traders start positioning for an extension of the pair's recent strong bullish trajectory witnessed over the past one week or so.

Technical levels to watch