USD/CAD clings to small daily gains, holds above 1.2700

• USD/CAD is trading in a relatively tight range on Wednesday.
• US Dollar Index stays in the green ahead of CPI data.
• WTI clings to modest gains after renewing multi-month highs.

The USD/CAD pair lost more than 70 pips on Tuesday pressured by the broad USD weakness and rising crude oil prices. With the greenback regathering its strength on Wednesday, the pair staged a modest rebound and was last seen gaining 0.17% on the day at 1.2730.

Eyes on US CPI data, T-bond yields

On Tuesday, the US Dollar Index (DXY) fell sharply in the late American session after the US bond auction triggered a sharp decline in yields. The DXY snapped a four-day winning streak and lost 0.4%. However, the cautious market mood helped the USD stay resilient against its rivals and the DXY is currently up 0.23% at 90.30.

Later in the session, the US Bureau of Labor Statistics will release the Consumer Price Index (CPI) figures for December. There won't be any significant macroeconomic data releases featured in the Canadian economic docket.

Additionally, investors will keep a close eye on US T-bond yields' performance, which has been the primary catalyst behind the USD's market valuation since the beginning of the year.

In the meantime, crude oil prices regained traction following Monday's technical correction and the barrel of West Texas Intermediate (WTI) reached its highest level since February at $53.90 before going into a consolidation phase. At the moment, the WTI is up 0.32% at $53.43, helping the commodity-related loonie limit its losses.

Technical levels to watch for