• USD/CAD comes under intense selling pressure on Wednesday amid broad-based USD weakness.
• The upbeat Chinese PMIs boost investors’ confidence and weigh heavily on the safe-haven buck.
• An intraday downtick in Oil prices could undermine the Loonie and help limit losses for the major.

The USD/CAD pair continues losing ground heading into the North American session and reverses a major part of the previous day's positive to the 1.3660 area. The pair currently trades near the 1.3585 area, or the daily low, and is pressured by the heavily offered tone surrounding the US Dollar.

In fact, the USD Index, which tracks the Greenback against a basket of currencies, retreats sharply from a multi-week high amid a slight recovery in the global risk sentiment. The upbeat Chinese PMI prints released earlier this Wednesday confirmed that recovery in the world's second-largest economy gained momentum in February. This, in turn, boosts investors' confidence and weighs on the safe-haven buck.

The downside for the USD, however, is likely to remain limited amid firming expectations that the Fed will continue to raise interest rates for longer to tame inflation. Moreover, the incoming positive US macro data pointed to an economy that remains resilient, which should allow the US central bank to stick to its hawkish stance. This, in turn, favours the USD bulls and could lend support to the USD/CAD pair.

Furthermore, an intraday downtick in Crude Oil prices might undermine the commodity-linked Loonie and supports prospects for the emergence of some dip-buying around the USD/CAD pair. Investors remain worried that rising borrowing costs will dampen economic growth and dent fuel demand. This, along with signs of increasing US crude stockpiles and additional supply from OPEC - act as a headwind for the black liquid.

The aforementioned fundamental backdrop warrants some caution before placing aggressive bearish bets around the USD/CAD pair and positioning for any further depreciating move. Next on tap is the release of the US ISM Manufacturing PMI, which, along with the broader risk sentiment, will drive the USD demand and provide some impetus. Traders will also take cues from Oil price dynamics to grab short-term opportunities.

Technical levels to watch