USD/CAD extends decline, touches lowest level since early December below 1.3280

• WTI looks to settle above $49.
• US Dollar Index pushes lower below 96 on more dovish Fed comments.
• The pair loses more than 300 pips since last Wednesday.

After breaking below the 1.33 mark, the USD/CAD pair continued to edge lower in the NA session and dropped to its lowest level since December 7 at 1.3278. As of writing, the pair was down 0.75% on the day at 1.3295. Since last Wednesday, the pair has lost more than 300 pips amid a combination of a weak greenback and stronger loonie supported by the decisive recovery seen in crude oil prices.

Earlier today, after Dow Jones Newswires reported that Saudi Arabia was planning to cut its exports by 800K barrels per day, crude oil prices pushed higher with the barrel of West Texas Intermediate inching close to the critical mark. At the moment, the WTI is trading slightly above $49, looking to record daily gains for the fifth straight day.

On the other hand, the US Dollar Index, which was already facing a bearish pressure following the disappointing PMI data, met a fresh selling wave after Atlanta Fed President Raphael Bostic said that he was currently seeing only one rate hike in 2019. The index is now at its lowest level since late October at 95.64, losing 0.55% on a daily basis.

On Wednesday, the BoC will announce its policy rate and publish its monetary policy statement before the FOMC releases the minutes of its December meeting later in the evening. Previewing the BoC meeting, "The Bank will have to acknowledge recent developments in the energy sector and financial markets, but will try to strike a balanced tone as the longer term forecast is largely intact (we expect just modest downward revisions to 2019 growth)," TD Securities analysts argued in a recently published report.

Technical levels to watch