USD/CAD struggles near one-month tops, just above mid-1.2400s

• Sustained USD selling bias dragged USD/CAD lower on the first day of the week.
• A modest pickup in the US bond yields extended some support to the greenback.
• Sliding oil prices undermined the loonie and helped limit deeper losses for the pair.

The USD/CAD pair remained depressed through the early European session and was last seen hovering near the 1.2460-65 region, just above one-month lows touched earlier this Monday.

The pair kicked off the new week on a downbeat note and extended last week's post-BoC sharp retracement slide from levels just above mid-1.2600s – the highest since March 10. This marked the second straight day of a negative move – also the third in the previous four – and was exclusively sponsored by the prevalent bearish sentiment surrounding the US dollar.

Investors seem convinced with the view that any spike in inflation is likely to be transitory and have been scaling back their expectations for an earlier than anticipated Fed lift-off. This, along with the underlying bullish tone in the financial markets, dragged the safe-haven USD to fresh multi-week lows and exerted some downward pressure on the USD/CAD pair.

That said, a combination of factors helped limit any further losses, at least for the time being. A modest uptick in the US Treasury bond yields extended some support to the USD. On the other hand, a fresh leg down in crude oil prices undermined the commodity-linked loonie and held bearish traders from placing aggressive bets around the USD/CAD pair.

Market participants now look forward to the US economic docket, featuring the release of Durable Goods Orders later during the early North American session. Apart from this, the US bond yields and the broader market risk sentiment might influence the USD. Traders will further take cues from oil price dynamics to grab some opportunities around the USD/CAD pair.

Technical levels to watch