USD/CAD drops to fresh 2-day low near 1.3070

WTI recovers above $68 on improved market sentiment.
US Dollar Index struggles to stay in the positive territory.

Eren Sengezer FXStreet

The USD/CAD pair came under a modest pressure in the last hour and touched a fresh 2-day low at 1.3072. As of writing, the pair was trading at 1.3080, losing 0.43% on the day.

An improved market sentiment amid strengthening Turkish lira on Tuesday seems to be helping the risk-sensitive commodities. Ahead of the API's weekly crude oil stock report, the barrel of West Texas Intermediate added over 1% on the day to recover to $68.18 and helped the oil-linked CAD extend its gains against the buck.

On the other hand, the US Dollar Index, which recorded robust gains since the second half of the previous week, seems to have lost its bullish momentum on Tuesday as investors look for fresh developments that would justify the USD rally. At the moment, the US Dollar Index is virtually unchanged on the day at 96.31. The data from the U.S. today showed that the import price index stayed unchanged on a monthly basis in July while the export price index declined by 0.5%.

The only data of interest later in the day will be the API's weekly crude oil stock report as mentioned above.

Technical levels to consider

1.3060 (20-DMA) now aligns as the first technical support ahead of 1.3015 (100-DMA) and 1.2960 (Aug. 7 low). On the upside, resistances could be seen at 1.3140 (daily high/50-DMA), 1.3200 (psychological level) and 1.3285 (Jul. 19 high). Meanwhile, the RSI indicator on the daily chart edged down toward the 50 area, suggesting that buyers are starting to lose their control over the pair's price action.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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