USD/CAD pulls back from one-month peak, slides to 1.3600 amid renewed USD selling

• USD/CAD retreats from a one-month top and is pressured by a combination of factors.
• A positive risk tone prompts selling around the safe-haven buck and weighs on the pair.
• A fresh leg up in Oil prices underpins the Loonie and contributes to the intraday slide.

The USD/CAD pair struggles to capitalize on the Asian session move up to the 1.3645-1.3650 region, or a one-month top and drops to the lower end of its daily range in the last hour. Spot prices currently trade around the 1.3600 mark and for now, seem to have stalled a goodish rebound from a nearly two-week low touched on Wednesday.

The US Dollar (USD) surrenders a major part of its intraday gains to a one-week high amid the upbeat market mood, which turns out to be a key factor that attracts fresh sellers around the USD/CAD pair. Apart from this, rising Crude Oil prices underpin the commodity-linked Loonie and further contribute to the currency pair's intraday pullback of around 50 pips. The lack of follow-through selling, however, warrants some caution for bearish traders and before positioning for any further depreciating move. 

The US Federal Reserve (Fed) decided to kick-start the policy-easing cycle with an oversized rate cut on Wednesday, though downplayed expectations for a more aggressive reduction in borrowing costs going forward. This, in turn, continues to push the US Treasury bond yields higher and should act as a tailwind for the Greenback. Apart from this, bets for a larger interest rate cut by the Bank of Canada (BoC) next month should cap the Canadian Dollar (CAD) and limit losses for the USD/CAD pair. 

Dovish BoC expectations were fueled by consumer inflation figures released on Tuesday, which showed that Canada's CPI posted its smallest rate of increase since February 2021 and the core measures fell to the lowest level in 40 months. Even from a technical perspective, acceptance above the very important 200-day Simple Moving Average (SMA) and an intraday breakout through a one-week-old trading range supports prospects for some meaningful appreciating move in the near term. 

Traders now look forward to the US economic docket – featuring the release of Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales data. Apart from this, US bond yields and the broader risk sentiment will drive demand for the safe-haven buck. This, along with Oil price dynamics, should allow traders to grab short-term opportunities around the USD/CAD pair.