The key contention level is seen above 1.3650

• USD/CAD extends its downside to 1.3700 on the weaker USD.
• The bearish outlook for USD/CAD remains intact below the 50- and 100-day EMAs.
• The first upside barrier will emerge at 1.3745; the critical support level is seen at 1.3655.

The USD/CAD pair loses momentum around 1.3700 during the early European session on Monday. The recovery of oil prices lifts the commodity-linked Loonie, as the country is the leading oil exporter to the US. Meanwhile, the US Dollar Index (DXY) drops to 103.70, the lowest since mid-July. Market players await the Federal Open Market Committee (FOMC) Meeting Minutes and Canadian inflation data on Tuesday for fresh impetus. The annual and monthly Canadian Consumer Price Index (CPI) is expected to rise by 3.2% and 0.1%, respectively.

Technically, the bearish outlook for USD/CAD remains intact as the pair holds below the 50- and 100-day Exponential Moving Averages (EMAs) on the four-hour chart. Additionally, the Relative Strength Index (RSI) is located in the bearish territory below 50, which means the path of the least resistance of USD/CAD is to the downside.

The immediate resistance level for the pair will emerge near the 100-EMA at 1.3745. The next barrier to watch is near the upper boundary of the Bollinger Band at 1.3771. Any decisive follow-through buying above the latter will see a rally to a high of November 14 at 1.3843, en route to a high of October 27 at 1.3880.

On the other hand, the critical support level is seen at 1.3655. The mentioned level is the confluence of the lower limit of the Bollinger Band and a low of November 15. The next contention level is located near a low of November 6 at 1.3629. A break below the latter will see a drop to the 1.3600-1.3605 zone, portraying the psychological round mark and a low of October 16. The additional downside filter to watch is a low of October 12 at 1.3578.

USD/CAD four-hour chart