Buoyant WTI crude oil prices seem to extend support to commodity-linked currencies - like the Canadian Dollar, dragging the USD/CAD pair back below 1.3000 handle.
Looking at the broader picture, the pair is consolidating after Friday's sharp up-surge of nearly 400-pips from the vicinity of 1.2700 handle. Moreover, the pair seems to facing difficulty in moving above 100-day SMA resistance near 1.3100 region and now seems to wait for fresh impetus to decisively break through this important resistance.
A broadly weaker US Dollar is assisting bounce in riskier assets - like commodities, including oil, eventually benefitting commodity-linked commodities. Crude is also gaining traction after API report, released on Tuesday, showed a larger-than-expected drawdown of 3.9 million barrels in US crude supplies. Maintaining its high degree of correlation, the Canadian Dollar is benefitting from rising crude oil prices.
Traders focus now shift to the official EIA report on weekly US crude oil inventories, which might drive crude oil prices in the near-term and eventually provide the required momentum for an eventual break-out for the USD/CAD pair.
Investors will also confront the release of core PCE price index, personal spending and pending home sales data from the US, later during NA session.
Technical levels to watch
Bulls would be eyeing for a sustained move above 100-day SMA resistance near 1.3100 handle, while bears would be aiming for a break below 50-day SMA support near 1.2950-40 region. A decisive break on either side would now determine the near-term direction for the pair.
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