USD/CAD recovers from one-month low as oil prices turn volatile

The USD/CAD pair staged a goodish recovery from sub-1.3400 level and refreshed session tops before retracing few pips to currently trade around 1.3425 region.

The pair's latest leg of sharp spike in the past hour or so could be attributed to a sudden plunge in oil prices following the news that OPEC seems all set to agree on 9-month output cut extension. At one point WTI crude oil tumbled to $50.00 neighborhood and weighed heavily on the commodity-linked currency - Loonie.

   •  Oil sees a flash crash as OPEC seems ready to extend cuts for 9 months

This coupled with a modest US Dollar recovery, as investors look past Wednesday's not so hawkish FOMC minutes, further collaborated to the pair's recovery move from one-month lows.

With the headlines coming out of the crucial major oil producers meeting, oil price-dynamics would continue be an exclusive driver of the pair's movement through Thursday's trading session. 

Technical levels to watch

A follow through buying interest has the potential to lift the pair towards 1.3455-60 resistance, above which a fresh bout of short-covering could assist the pair towards reclaiming the key 1.3500 psychological mark.

On the flip side, sustained weakness back below the 1.3400 handle would turn the pair vulnerable to extend its near-term downward trajectory and aim towards testing its next support near 1.3330-25 region.