USD/CAD retraces gains as oil stages recovery
After refreshing its 6-day high a couple of pips above the 1.33 mark, the USD/CAD pair started to erase its gains as the loonie found support on recovering oil prices. As of writing, the pair is trading at 1.3280, still up 0.1% on the day.
The barrel of West Texas Intermediate spent the first half of the day consolidating its losses from yesterday near 7-month lows around the $43 handle. However, after a recent report suggested that OPEC is thinking about deeper cuts as the increase in the U.S. shale oil production is more than what OPEC members had foreseen, the barrel of WTI rose to its fresh session high at $43.70. As of writing, it was trading at $43.65, up 0.35% on the day.
- Iran OilMin Zanganeh: OPEC mulls deeper cuts due to higher than expected US oil output - S&P Platts
On the other hand, the fact that the US Dollar Index is having a difficult time extending its rise above mid-97s amid a lack of fresh catalysts, limit the gains seen in the USD/CAD pair as well. The only data left in the day, Existing Home Sales from the U.S., will be released at the top of the hour, but it's unlikely to cause any sharp fluctuations.
- US Dollar testing lows near 97.30
Technical outlook
The pair hadn't been able to make a clean break above 1.3300 (psychological level/daily high) and this level remains as the first technical resistance in the short-term. 1.3365 (200-DMA) and 1.3400/1.3390 (psychological level/20-DMA) could be seen as the following resistance. On the downside, supports align at 1.3200 (psychological level), 1.3165 (Jun. 14 low) and 1.3100 (psychological level).
- Oil price is driving FX markets - SocGen