USD/CAD recovers toward 1.4000 area, remains on track to close in red
|- WTI erases majority of daily losses after slumping toward $10.
- US Dollar Index loses recovery momentum ahead of 100.
- CB Consumer Confidence Index in April plunges to 86.9.
The USD/CAD pair dropped to its lowest level since April 15th at 1.3934 on Tuesday pressured by recovering crude oil prices and the selling pressure surrounding the USD. However, the pair has staged a technical correction and erased a portion of its daily losses in the late trading hours of the American session. As of writing, the pair was down 0.3% on a daily basis at 13990.
Earlier in the day, crude oil prices continued to push lower and the barrel of West Texas Intermediate (WTI) came within a touching distance of the critical $10 mark. Renewed hopes of major economies easing coronavirus restrictions helped the WTI erase its losses and allowed the commodity-related CAD to stay strong against its American counterpart.
Nevertheless, the WTI remains on track to finish the day with modest losses below $13 ahead of the American Petroleum Institue's weekly Crude Oil Stock data.
USD extends slide ahead of Wednesday's key macro events
In the meantime, the US Dollar Index (DXY) pulled away from the 13-day low that it set at 99.45 on Tuesday as the uninspiring performance of Wall Street ramped up the demand for the safe-haven greenback. However, the DXY seems to have lost its momentum ahead of the 100 mark as it looks the third straight trading day in the negative territory.
On Wednesday, market participants will be paying close attention to the US Bureau of Economic Analysis' first estimate of the first-quarter GDP data and the FOMC monetary policy announcements.
Previewing the GDP data, “the crucial fact is how much further the economy will fall in April, May, and June," said FXStreet analyst Joseph Trevisani. "A larger than forecast shrinkage in GDP in the first quarter will force markets to confront the possibility that the decline will be deeper and longer than anticipated.”
Technical levels to watch for
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