USD/CAD struggles to gain traction above 1.25
|- Oil rally falters, WTI sits above $60
- USD remains under pressure against rivals.
- Manufacturing PMI data awaited.
The USD/CAD pair was able to find support ahead of the critical 1.25 handle, but it's struggling to stage a decisive recovery. As of writing, the pair was trading at 1.2535, losing 0.12% on the day.
After closing 2017 near the 92 mark, the US Dollar Index started the first trading day of 2018 with a bearish gap and continued to push lower toward mid-91.50, refreshing its lowest level since mid-September. Although there were no apparent drivers behind today's fall, it looks like investors can't find any reasons to take some long USD positions. With a break below 91, the DXY will refresh its lowest level in three years, and that move could bring in more sellers and continue to weigh on the buck.
On the other hand, after recording substantial gains for four straight months, the barrel of West Texas Intermediate seems to have gone into a consolidation phase. At the moment, the barrel of WTI is trading at 60.35, down 0.1% on the day. However, as long as it closes the day above $60, the bullish momentum is likely to build up in the near-term, which could allow the commodity-sensitive loonie to gather strength.
Later in the session, Markit is going to release the PMI data for manufacturing sector both in the United States and Canada.
Technical levels to consider
The pair could encounter the first critical support at 1.2500 (psychological level) ahead of 1.2450 (Oct. 19 low) and 1.2410 (Sep. 29 low). On the flip side, resistances could be seen at 1.2610 (100-DMA), 1.2700 (psychological level) and 1.2750 (50-DMA/20-DMA). Meanwhile, the RSI indicator on the daily chart recently touched the 30 mark, suggesting that a technical recovery could be in place before the next leg down.
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