USD/CAD holds weaker below 1.31 handle

   •  Positive oil prices underpinning commodity-linked Loonie.
   •  Easing USD bearish pressure helps limit further downside.
   •  Focus remains on Wednesday’s FOMC decision.

The USD/CAD pair traded with a mild negative bias, for the second consecutive session on Tuesday, and has now moved back within striking distance of previous session's swing lows.

The pair on Monday initially rose beyond the 1.3100 handle, fresh 9-month highs, but failed to sustain at higher levels and witnessed to an intraday low level of 1.3047 amid some renewed US Dollar selling. 

The USD bearish pressure now seems to have eased a bit, but a goodish pickup in crude oil prices underpinned the commodity-linked currency - Loonie and exerted some downward pressure on the major. 

It, however, remains to be seen if the dip is being bought into or the pair extended its profit-taking slide as focus shifts to the much awaited FOMC decision, due to be announced during the NY trading session on Wednesday.

Ahead of the key event risk and in absence of any major market moving economic releases, the USD/oil price dynamics might continue to act as key determinants of the pair's movement.

Technical levels to watch

Immediate support remains near mid-1.3000s, below which the pair could extend the fall back towards retesting the key 1.30 psychological mark. On the upside, the 1.3090-1.3100 region remains an immediate hurdle, which if cleared decisively might pave the way for an extension of the pair's bullish trajectory towards reclaiming the 1.3200 handle.