USD/CAD rebounds to 1.24, still negative on day

Following a slump to its lowest level since June of 2015 at 1.2336, the USD/CAD reversed its course in the late NA session and recovered a big portion of its daily losses. As of writing, the pair was trading at 1.2395, losing 0.15% on the day.

The selling pressure witnessed on the pair during the second half the day was caused by a broad-based USD sell-off and the solid performance of crude oil prices. The commodity-sensitive loonie gained value against its competitors as the barrel of West Texas Intermediate touched its highest level since mid-August at $49. However, the fact that the WTI started to retrace its earnings allowed the pair to find support. At the moment, the WTI was trading at $48.65, still up nearly $3 on the day.

On the other hand, the US Dollar Index, which dropped to 92.14, is now consolidating its daily losses as its moving sideways near the 92.30 mark. Although Minneapolis Fed President Neel Kashkari adopted a dovish tone in his speech, the greenback remained resilient against its peers as it was no surprise to the investors that he was against another rate hike in 2017. Nevertheless, the index is looking to close the day with losses as today's data from the U.S. cast doubt on the strength of the economy.

On Wednesday, the BoC is going to announce the interest rate decision and publish its policy statement. "Unless we get an explicit signal that the BoC will pause before hiking again, the risks are that a surprise rate hike fuels an unwarranted tightening of financial conditions (including CAD rally) that could choke any nascent recovery. This scenario could see USD/CAD run down to the 1.2250 area,” explained analysts at ING.

• BoC could raise rates - BBH

Technical outlook

The pair could face the first support at 1.2340 (Sept. 1 low/daily low) ahead of 1.2300 (psychological level) and 1.2220 (Jun. 17, 2015, low). On the upside, resistances align at 1.2465 (10-DMA), 1.2550 (Aug. 29 high) and 1.2590 (50-DMA).