Despite weaker oil prices, USDCAD struggles above 1.3400; US midterm election updates are in focus

The USDCAD is trading near 1.3450 ahead of Wednesday's European session amid volatile market conditions. In addition to covid worries from China and a cautious mood before of the important data/events, the concern over the US government shutdown has restrained the Loonie pair's recent movements.

However, weaker prices of Canada's primary export, particularly WTI Crude Oil, encourage USDCAD bulls. The energy benchmark has declined for three consecutive trading days, falling 0.85% intraday around $87.75 as of press time.

Elsewhere, the US Dollar Index (DXY) registers modest gains near 109.70 amid rising fears of a US government stalemate due to the most recent election results. In addition to the stories predicting a six-month high in China's covid rate and further virus-driven lockdowns, the market's worries and the USDCAD exchange rate may be fueled.

S&P 500 Futures struggle to mirror Wall Street's gains and US 10-year Treasury rates remain bearish after breaking a four-day downtrend the day before.

It should be emphasized, however, that the apprehension around Thursday's US Consumer Price Index (CPI) for October and a speech by the Governor of the Bank of Canada (BOC), Tiff Macklem, poses a challenge to pair purchasers. The cause may be related to recent contradictory US statistics and Fedspeak, as well as the BOC's slowing of rate hikes.

A one-week-old declining trend line illustrates the recent weakening of the USDCAD pair. The bearish MACD signal and the evident breach of the prior support line from early October also give sellers reason for optimism. In addition, the pair's continuous trading below the 200-SMA strengthens the bearish outlook.