• USD/CAD attracts sellers for the second straight day amid the post-election fallout in the US Dollar.
• Fed hike bets limit USD losses, while bearish oil prices undermine the Loonie and support the pair.
• Traders also opt to wait for the release of monthly jobs reports from the US and Canada on Friday.

The USD/CAD pair remains under some selling pressure for the second straight day and trades around mid-1.3900s during the early European session on Thursday, close to its lowest level since September 16, set the previous day.

The US Dollar (USD) drops to a fresh low since late September as a Democratic sweep in the US midterm elections raised worries about fiscal gridlock, which could limit government spending and lead to slower economic growth. Furthermore, the outcome lowered expectations that US President Donald Trump will resume military strikes against ? Iran, fueling hopes for an end to the Middle East conflict. This turns out to be another factor weighing on the safe-haven buck, which, in turn, is seen exerting pressure on the USD/CAD pair.

Meanwhile, the latest optimism drags crude oil prices to a two-month low, which helps ease inflation fears and leads to a further decline in US bond yields. Investors, however, are still pricing in over an 80% chance that the US Federal Reserve (Fed) will raise borrowing costs again in December. Moreover, the geopolitical risk premium remains in play amid the US-Iran standoff over the Strait of Hormuz. This limits deeper USD losses, while bearish oil prices undermine the commodity-linked Loonie and could support the USD/CAD pair.

Traders might also opt to wait for the release of monthly employment details from the US and Canada, due on Friday, before placing fresh directional bets. The well-known US Nonfarm Payrolls (NFP) report, along with speeches from influential FOMC members, will be looked at for more cues about the Fed’s future policy path and drive USD demand. Apart from this, the incoming geopolitical headlines could infuse some volatility and influence oil price dynamics, providing some meaningful trading impetus to the USD/CAD pair.

USD/CAD 4-hour chart

Technical Analysis

In the four-hour chart, the USD/CAD pair holds a bearish tone below the 200-period Simple Moving Average (SMA) at 1.4119 and under the 61.8% Fibonacci retracement at 1.3970 of the latest upswing. The next relevant is seen at the 78.6% retracement at 1.3880, with a deeper floor around 1.3765, where buyers would be expected to show more interest if the correction extends.

On the topside, initial resistance emerges at the 61.8% Fibo. retracement at 1.3970, followed by the 50% level at 1.4033 and the 38.2% retracement at 1.4097. Above these, the 200-period SMA at 1.4119 and the 23.6% retracement at 1.4175 guard the path toward the recent cycle high near 1.4302.