• USD/CAD retreats further from multi-week high and is pressured by a combination of factors.
• A goodish rebound in oil prices underpins the loonie and exerts pressure amid a weaker USD.
• Rising bets for more aggressive Fed rate hikes to limit the USD losses and lend some support.
• Traders might also refrain from placing aggressive bets ahead of the key US jobs report (NFP).

The USD/CAD pair extends the overnight pullback from levels just above the 1.3200 mark and edges lower on Friday, snapping a three-day winning streak to a seven-week high. The steady intraday descent drags spot prices back below mid-1.3100s during the early European session and is sponsored by a combination of factors.

Crude oil prices stage a goodish recovery move on Friday and reverse a major part of the previous day's losses back closer to the monthly low touched in August. This, in turn, underpins the commodity-linked loonie, which, along with a modest US dollar weakness, exerts some downward pressure on the USD/CAD pair.

A softer tone surrounding the US Treasury bond yields keeps the USD bulls on the defensive amid some repositioning trade ahead of the US monthly jobs data, due later this Friday. Apart from this, signs of stability in the financial markets further drag the safe-haven buck away from a two-decade high set on Thursday.

The downside for the USD/CAD pair, however, seems cushioned amid expectations for a more aggressive policy tightening by the Fed, which should continue to act as a tailwind for the greenback. Moreover, concerns that a global economic downturn will dent fuel demand should cap oil prices and lend support to the major.

Hence, it will be prudent to wait for strong follow-through selling before positioning for any further depreciating move for the USD/CAD pair. Traders might also refrain from placing aggressive bets and prefer to wait for the release of the closely-watched US NFP report, which will play a key role in driving the USD demand.

Apart from this, the broader risk sentiment, might influence the greenback and provide some impetus to the USD/CAD pair. Traders will also take cues from oil price dynamics to grab short-term opportunities on the last day of the week and ahead of the Bank of Canada (BoC) monetary policy meeting on September 7.

Technical levels to watch