USD/CAD extends losses below 1.25 as DXY eases to 93

After refreshing its highest level since August 31 at 1.2520, the USD/CAD came under pressure and moved into the negative territory in the NA session. As of writing, the pair was trading at 1.2460, losing 0.13% on the day.

The US Dollar Index extended its gains during the first half of the day on Wednesday before finding resistance at the 93.50 handle. Although the initial retreat looked like a technical correction of the index's upsurge since the start of the week, mixed macro data from the U.S. increased the pressure on the greenback and pushed the DXY to a new daily low at 92.92. At the moment, the index was at 93.04, losing 0.25% on the day.

According to the US Department of Labor, impacted by hurricanes Harvey and Irma, weekly initial jobless claims rose to 272K from 260K. Other data showed that the third estimates of the real GDP growth for Q2 improved to 3.1% from 3% while the PCE prices remained unchanged at 0.3%.

On the other hand, boosted by yesterday's EIA report, which revealed a larger-than-expected draw in crude oil inventories in the U.S., the barrel of West Texas Intermediate gained traction on Thursday and renewed its 5-month high near the $53 handle, helping the commodity-linked loonie gain strength. With an empty economic calendar in the remainder of the day, the pair is likely to remain in a confined range.

• WTI firmer, approaches $53.00 on geopolitical jitters

Technical outlook

The immediate support for the pair aligns at 1.2450 (50-DMA) ahead of 1.2360 (10-DMA) and 1.2315 (Sep. 21 low). On the upside, resistances could be seen at 1.2500 (psychological level), 1.2550 (Aug. 29 high) and 1.2635 (Aug. 30 high). 

• USD/CAD could slip back towards the low-1.2400s – Scotiabank