USD/CAD eases below 1.28 as DXY fails to hold above 94

Canadian data comes in below market expectations.
Falling US T-bond yields weigh on the greenback.
WTI sticks to modest daily gains near mid-$56s.

Eren Sengezer FXStreet

After spending the majority of the day in a narrow range above the 1.28 mark, the USD/CAD pair came under pressure in the early NA session and was last seen trading at 1.2777, where it was losing 0.34% on the day.

USD weakness caps the pair's gains

The US Dollar Index, which refreshed its weekly high at 94.08 during the European trading hours, lost its traction recently and turned negative on the day below the 94 mark. A fresh bearish pressure seen on the positively-correlated US Treasury-bond yields seems to the primary reason behind the USD's drop. As of writing the 10-year T-bond yield is down 1.3% while the DXY is losing 0.05%at 93.95.

Today's data from Canada showed that the wholesale sales declined by 1.2% to $62 billion in September, missing the market expectation of a 0.3% increase. On the other hand, the Chicago Fed National Activity Index improved to 0.65 from 0.36 in October. Nevertheless, the data failed to have an apparent impact on the pair's price action.

Meanwhile, following yesterday's retreat, the barrel of West Texas Intermediate is staging a modest recovery on Tuesday, helping the commodity-sensitive loonie preserve its strength. At the moment, the barrel of WTI is trading at $56.60, up 0.3% on the day. The API's weekly crude oil stock report, which is scheduled to be released at 20:30 GMT, could be the next catalyst for oil prices.

Technical levels to watch

On the downside, the pair could encounter the first technical support at 1.2765 (20-DMA) ahead of 1.2665 (Nov. 10 low) and 1.2545 (100-DMA). On the flip side, resistances are located at 1.2835 (daily high), 1.2915 (200-DMA) and 1.3000 (psychological level). The RSI indicator on the daily graph is moving lower towards the 50 mark, showing that bulls' dominance is weakening.

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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