USD/CAD drops to 1.3400 neighborhood as oil surges on OPEC deal hopes

The USD/CAD pair's recovery attempt to 1.3500 psychological mark was sold into and the pair has now dropped to a fresh session low amid renewed optimism surrounding OPEC output deal. 

Currently hovering around 1.3400 handle, testing 3-day lows, the pair came under intense selling pressure after comments from Iraq, that it will cooperate with OPEC to reach an agreement, lifted crude oil prices sharply higher, which eventually was seen benefitting the commodity-linked currency - Loonie. In fact, WTI crude oil reversed early steep losses and is now trading with strong gains of nearly 2.0% for the day, hovering around $47.00/barrel mark. 

Meanwhile, the major remained unaffected by resurgence of greenback buying interest, with the overall US Dollar Index erasing early losses to move back into positive territory and inching closer to the highest level since March 2003 touched last week.

Moving ahead, the pair would remain dependent on price-action around oil markets and would trade as an oil proxy ahead of the official OPEC meeting in Vienna on Wednesday. 

Technical levels to watch

On a sustained weakness below 1.3400 handle, leading to a subsequent drop below 1.3385-80 support area, the pair is likely to accelerate the slide towards testing 50-day SMA support near 1.3300 round figure mark. On the upside, 1.3435-40 area now becomes immediate resistance above which the pair seems to make a fresh attempt towards reclaiming 1.3500 handle and aim towards testing 1.3535 strong horizontal resistance area.

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