USD/CAD eases off multi-week highs, stays in the positive territory above 1.32

USD/CAD loses momentum after advancing to 1.3258.
WTI trades in the negative territory below $67.
US Dollar Index eases below 95 on weak housing data.

Eren Sengezer FXStreet

Boosted by the broad-based greenback strength and falling crude oil prices, the USD/CAD pair reached its highest level since late June at 1.3258 on Wednesday before retracing a portion of its daily gains. As of writing, the pair was trading at 1.3230, up 0.3%, on the day.

The data from the United States showed that building permits and housing starts contracted by 2.2% and 12.3% respectively. The US Dollar Index, which broke above the 95 mark earlier today, lost its traction on dismal data and was last seen at 94.93, where it was still up 0.2% on the day. Investors now turn their attention to Fed Chairman Jerome Powell's second-day testimony before the Senate Banking Committee.

Summarizing Powell's comments from yesterday, "during Q&A, Chair Powell avoided any suggestion that the Committee was leaning one way or another. Powell did not talk about the prospect of a "pause" in Fed hiking. On the other hand, he did not stress the potential risks of inflation and financial stability from firming labor markets," Nomura analysts said.

In the meantime, the bearish pressure surrounding crude oil since the start of the week remains intact and makes it difficult for the commodity-sensitive loonie to take advantage of the recent USD weakness.

Following yesterday's API report, which showed a surprise build in crude stocks in the U.S., the barrel of West Texas Intermediate broke below the $67 handle and failed to make a recovery on Wednesday. At the moment, the barrel of WTI is trading at $66.60, losing 55 cents, or 0.8%, on the day. Later in the session, the EIA's weekly inventory data could be the next catalyst for crude oil prices.

Technical levels to consider

The initial resistance for the pair aligns at 1.3260 (daily high) ahead of 1.3300 (psychological level) and 1.3385 (Jun. 27 high). On the downside, supports could be seen at 1.3170 (20-DMA), 1.3100/1.3095 (psychological level/50-DMA) and 1.3065 (Jul. 9 low).

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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