The Canadian dollar dropped against its key counterparts in the European session on Tuesday, as oil prices declined after U.S. President Donald Trump criticized OPEC for output cuts to prop up oil prices.

Crude for December delivery dropped $1.22 to $58.71 a barrel.

In a Twitter post on Monday, Trump blamed Saudi's plan to slash oil output, saying that oil prices should be lower on the basis of supply.

"Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!" Trump tweeted.

Meanwhile, European markets were higher on optimism about a U.S.-China deal after the two countries resumed trade talks. Investors are waiting to see whether Italy would submit a revised 2019 budget to the European Commission in line with EU rules, before the deadline tonight.

The currency traded mixed against its major counterparts in the Asian session. While it rose against the greenback and the yen, it held steady against the euro. Against the aussie, it dropped.

The loonie pared gains to 1.3243 against the greenback, from a high of 1.3215 hit at 12:15 am ET. The next possible support for the loonie is seen around the 1.34 level.

Having advanced to 1.4853 against the euro at 3:00 am ET, the loonie reversed direction and dropped to 1.4903. The loonie is likely to find support around the 1.51 area.

Figures from the Federal Statistical Office showed that Germany's consumer price inflation in October was the highest in over a decade.

The consumer price index rose 2.5 percent year-on-year following a 2.3 percent increase in September.

The loonie pared some of its early gains against the yen with the pair trading at 86.15. This may be compared to near a 2-week low of 85.77 hit at 7:15 pm ET. On the downside, 84.5 is possibly seen as the next support level for the loonie.

The loonie fell back to 0.9541 against the aussie, off its early 6-day high of 0.9488.The currency is thus on track to pierce its early 4-day low of 0.9546. If the loonie falls further, it may challenge support around the 0.97 level.

Looking ahead, at 10:00 am ET, Federal Reserve Governor Lael Brainard gives a speech titled "Artificial Intelligence and the New Financial Landscape" at the Fintech conference hosted by the Federal Reserve Bank of Philadelphia.

The U.S. monthly budget statement for October is set for release at 2:00 pm ET.

Grafico Cross US Dollar vs CAD (FX:USDCAD)

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Grafico Cross US Dollar vs CAD (FX:USDCAD)

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