USD/CAD surges to 1.35 neighborhood as oil tumbles

The USD/CAD pair caught fresh bids near session lows and spiked to session high, just few pips short of the 1.3500 psychological mark.

A fresh wave of intense selling pressure in oil markets, with WTI crude oil tumbling over $1 in the past hour, has been a key factor weighing heavily on the commodity-linked currency - Loonie. The latest leg of sharp slide in oil prices came after the release of OPEC report, which although foresee rising world oil demand in 2017 but also revised up US forecast to 100kbpd on a rebound in shale. 

Meanwhile, a mildly positive sentiment surrounding the US Dollar further collaborated to the strong bid tone surrounding the major, with focus on the two-day FOMC meeting due to get underway later today.

On the economic data front, in-line / slightly better-than-expected release of the US PPI print doing little to hinder the pair's up-move, albeit might have raise expectations from the headline consumer inflation figures (CPI), due for release on Wednesday, ahead of the Fed announcement. 

Technical levels to watch

On a sustained move above the 1.3500 handle, leading to a subsequent strength above 1.3510 level, is likely to accelerate the up-move towards 1.3555-60 resistance before the pair eventually aims towards reclaiming 1.3600 handle.

Meanwhile on the downside, any retracement below 1.3475 now seems to find strong support near 1.3450-45 region, which if broken would turn the pair vulnerable to break through the 1.3400 handle and head towards testing 1.3375-70 support area.