USD/CAD retreats to mid-1.2700s pressured by surging oil prices
|- USD/CAD turned south on Tuesday after posting strong gains on Monday.
- WTI rose above $53 for the first time since February.
- US Dollar Index consolidates gains around 90.40 ahead of mid-tier data.
The USD/CAD pair gained nearly 100 pips on Monday but struggled to preserve its bullish momentum on Tuesday. As of writing, the pair was down 0.27% on a daily basis at 1.2749.
CAD capitalizes on oil rebound
Following a sharp decline at the start of the week, crude oil gained traction on Tuesday and touched its highest level since late February above $53, providing a boost to the commodity-sensitive loonie. Ahead of the American Petroleum Institue's (API) Weekly Crude Oil Stock data, the WTI is up 1.6% on the day at $53.
On the other hand, the US Dollar Index (DXY), which closed the previous four trading days in the positive territory, seems to have gone into a consolidation phase ahead of mid-tier data releases from the US. At the moment, the DXY is little changed on the day at 90.44.
The US economic docket will feature the NFIB Business Optimism Index, the IBD/TIPP Economic Optimism Index and JOLTS Job Openings data later in the day.
In the meantime, the 10-year US Treasury bond yield extended its rally to a fresh 10-month high of 1.162% on Wednesday and is currently gaining around 1%. If US T-bond yields continue to push higher, the greenback could start outperforming its rivals and allow USD/CAD to stage a recovery.
Technical levels to watch for
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