• USD/CAD remains weak for the fifth consecutive day ahead of Canadian labor market data.
• Rising oil prices are supporting the loonie and weighing on the pair amid a slight decline in the USD.
• Spot prices are expected to record weekly losses for the first time in four weeks.

The USD/CAD pair is under selling pressure for the fifth straight day, weighed down by a combination of factors, with spot prices trading around the 1.3725 region during the early European session, just above a nearly three-week low reached on Wednesday.

Crude oil prices are trending positive for the third day in a row and are on track to post a weekly gain of over 3% as concerns over falling demand and fears of a widening Middle East conflict ease. This in turn supports the commodity-linked loonie, which, along with the emergence of some US dollar selling, is a headwind for the USD/CAD pair.

The USD Index (DXY), which tracks the greenback against a basket of currencies, continues to decline from its weekly high reached on Thursday, as US Treasury yields continue to decline amid speculation of major interest rate cuts by the Federal Reserve (Fed). Apart from that, a generally positive mood in global equity markets continues to dampen demand for the safe-haven dollar.

The fundamental backdrop mentioned above suggests that the path of least resistance for the USD/CAD pair is to the downside, although traders may prefer to wait for the release of the monthly Canadian employment data before placing any new bets. The important jobs report will influence the Canadian dollar (CAD) and provide some significant momentum to the USD/CAD pair.

Apart from that, USD and oil price dynamics are likely to contribute to short-term trading opportunities on the last day of the week. The market focus will then turn to the latest US consumer inflation numbers, which will be released next Wednesday and will play a key role in determining the Fed’s future policy decision and drive USD demand in the short term.