USD/CAD drops to fresh multi-month lows near 1.3130 on broad USD weakness

• USD/CAD trades below 1.3150 after closing the previous week below 1.3200.
• US Dollar Index failed to build on last week's recovery gains.
• WTI rises more than 1% on Monday, closes in on $43.

The USD/CAD pair closed in the negative territory for the sixth time last week and extended its slide on Monday. As of writing, the pair was trading at its lowest level since January at 1.3133, losing 0.3% on a daily basis.

DXY retreats below 93.00

Following last week's rebound, the US Dollar Index (DXY) opened the new week on the back foot with the greenback struggling to find demand as a safe-haven. Reflecting the upbeat market mood, major European equity indexes are posting strong gains on Monday and the S&P 500 futures are up nearly 1%, suggesting that Wall Street is likely to stage a risk rally as well.

At the moment, the DXY is down 0.35% on the day at 92.87. The only data featured in the US economic docket on Monday will be the Federal Reserve Bank of Chicago's National Activity Index. 

Meanwhile, crude oil is also capitalizing on risk flows and helps the commodity*sensitive loonie gather strength against its rivals. The barrel of West Texas Intermediate was last seen trading at $42.78, gaining 1.2% on a daily basis. 

Friday's second-quarter GDP report from Canada will be critical for the CAD. Previewing this data, TD Securities analysts said that they expect the economic activity to contract by a record pace of 36.3%.

Technical levels to watch for