USD/CAD rallies back to 1.3075-80 resistance amid weaker oil prices

• USD/CAD regains positive traction and climbs to 1.3075 resistance zone.
• Sliding crude oil prices weighed on the loonie and remained supportive.
• The upside is likely to remain capped ahead of the BoC on Wednesday.

The USD/CAD pair edged higher through the early European session on Tuesday and is currently placed near the 1.3075-80 strong horizontal resistance.

Following the previous session's modest downtick, the pair managed to regain some positive traction on Tuesday and was being supported by a combination of factors – the prevailing bullish sentiment around the US dollar and sliding crude oil prices.

USD/CAD supported by sliding oil prices

The greenback managed to preserve last week's modest gains, triggered by better-than-expected US economic releases, which supported expectations that the US economy will continue to expand and dampened prospects for any further interest rate cuts by the Fed.

Meanwhile, an intraday pullback in crude oil prices undermined demand for the commodity-linked currency – the loonie – and further collaborated to the pair's intraday positive move. Oil prices fell nearly 1% on Tuesday amid fading supply concerns from Libya.

It will now be interesting to see if the pair is able to capitalize on the positive momentum or bulls refrain from placing any fresh bets as the focus now shifts to the latest monetary policy update by the Bank of Canada, scheduled to be announced on Wednesday.

Technical levels to watch