The USD struggles to attract any meaningful buyers and exerts some pressure on the pair.

The USD/CAD pair trades with a negative bias for the second straight day on Monday, though it lacks follow-through selling and holds above the 200-day Simple Moving Average (SMA) through the Asian session. Spot prices currently hover around the 1.4000 psychological mark and remain well within striking distance of the highest level since April 10, touched on Friday.

Crude Oil prices open with a bullish gap at the start of a new week and recover a part of last week's slump to a five-month low in reaction to US President Donald Trump's softer tone on the 100% China tariff threat. This helps ease fears of a worsening US-China trade conflict and fuel demand concerns. Apart from this, Friday's better-than-expected Canadian employment report, which showed that the economy added a surprise 60,400 jobs in September, offers some support to the commodity-linked Loonie and acts as a headwind for the USD/CAD pair.

Meanwhile, the US Dollar (USD) struggles to attract any meaningful buyers and consolidates Friday's corrective slide as the risk-on impulse undermines demand for safe-haven assets. Apart from this, bets that the US Federal Reserve (Fed) will cut interest rates two more times this year and a prolonged US government closure keep the USD bulls on the defensive. This, in turn, is seen as another factor capping the upside for the USD/CAD pair. However, persistent trade-related uncertainties may deter traders from placing aggressive directional bets.

From a technical perspective, last week's breakout through the 200-day SMA and the 1.4000 psychological mark for the first time since April was seen as a key trigger for the USD/CAD bulls. This, in turn, suggests that any further corrective slide could be seen as a buying opportunity near the 1.3980-1.3975 area (200-day SMA), which should limit the downside near the 1.3940-1.3935 horizontal support. Moreover, relatively thin liquidity on the back of a holiday in the US and Canada warrants some caution amid a mixed fundamental backdrop.

USD/CAD remains on the defensive amid recovering Oil prices, subdued USD demand | FXStreet