• USD/CAD fades bounce off three-week low amid sluggish markets.
• US Dollar struggles to defend recent gains, Oil price remains sidelined.
• Mixed sentiment about US debt-ceiling accord, banking turmoil prod Loonie pair traders.

USD/CAD renews intraday low near 1.3365 as it fails to defend the week-start rebound amid sluggish markets during early Tuesday. Adding strength to the Loonie pair’s pullback moves could be the US Dollar’s struggle to defend the previous gains amid a cautious mood ahead of the key US debt-ceiling talks in the White House. It’s worth observing that mildly bid WTI crude oil, Canada’s key exports, also allows the quote to lure bears.

That said, the US Dollar Index (DXY) retreats to 101.42 while consolidating intraday gains amid unimpressive details of the Federal Reserve’s (Fed) quarterly bank loan survey. Even so, upbeat US inflation expectations, per 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data, join fears of gloomy conditions if the US fails to extend the debt ceiling to put a floor under the greenback.

WTI crude oil clings to mild gains near $73.00, up for the fourth consecutive day, as fears of recession jostle with cautious optimism as major Asian nations open international borders. Furthermore, the easing fears of the bank crisis and the US Dollar’s inability to regain upside traction also allow the Oil price to grind higher.

Amid these plays, S&P 500 Futures remain indecisive near 4,150 while the US Treasury bond yields prod a three-day winning streak.

Moving on, a light calendar and cautious mood ahead of the top-tier data/events can keep restricting the USD/CAD moves. That said, today’s White House talks on altering the debt ceiling expiration, currently looming around June, will be crucial to determine short-term market moves. Given the wide differences among the US policymakers on the issue, the likely indecision and burden on the US Dollar can’t be ruled out. However, Wednesday’s likely upbeat US inflation numbers for April may defend the Loonie buyers, unless the dovish Fed concerns weigh on the quote while other things remain the same.

Technical analysis

Despite the latest retreat in the USD/CAD prices, Monday’s bullish candlestick formation and a corrective bounce off an upward-sloping support line from November 2022 keep the buyers hopeful.

Also read: USD/CAD Price Analysis: Justifies Dragonfly Doji candlestick to bounce off key support line towards 1.3400