USD/CAD reverses an early dip to 1.3200 handle, 3-week lows

   •  Risk-off mood eases the USD bearish pressure and helps bounce off lows.
   •  Falling oil prices undermine Loonie and remain supportive of the uptick.
   •  Focus remains on the upcoming US-China trade talks/FOMC meeting.

The USD/CAD pair reversed an early dip to fresh two-week lows and quickly recovered over 20-pips from the 1.3200 neighborhood.

The US Dollar bearish pressure, triggered by news reports that the Fed is considering to stop shrinking its massive balance sheet sooner than anticipated, seems to have eased a bit amid a fresh wave of global risk-aversion trade.

Despite a deal to reopen the US government after a prolonged shutdown, investors remained on the edge ahead of the next round of US-China trade talks and provided a minor lift to the greenback's relative safe-haven status. 

This coupled with a sharp fall in crude oil prices, which tend to undermine demand for the commodity-linked currency - Loonie, further assisted the pair to once again defend/bounce off 100-day SMA support area.

In fact, WTI crude oil fell nearly 2% and continued to be weighed down by Baker Hughes's weekly report on Friday that showed US companies added rigs for the first time in 2019, signalling that output may rise further.

The rebound, however, seemed to lack any strong conviction as investors turned their attention to this week's highly anticipated FOMC meeting, wherein the central bank is expected to confirm a pause in the tightening cycle.

In the meantime, the USD/oil price dynamics might continue to influence the pair's momentum on Monday amid absent relevant market moving economic data and ahead of the high-level US-China trade talks.

Technical levels to watch