After dropping to its lowest level since mid-February at 1.3013 in the US afternoon, the USD/CAD went into a consolidation phase and ignored the recent comments from the BoC Deputy Governor Patterson. As of writing, the pair is trading at 1.3030, losing 1.3% on the day.
The continuous recovery seen in crude oil prices seems to be the primary reason behind the commodity-linked loonie's strength on Wednesday. For the second day in a row, the barrel of West Texas Intermediate is gaining more than 1% as the dismal buildup seen in the weekly EIA report was not enough to restrain the recovery. As of writing, the barrel of WTI is trading at $44.70, up 1.02% on the day.
On the other hand, despite an attempt to rebound above the 96 handle in the early NA session, the US Dollar Index continues to stay under pressure on disappointing macro data. After the data released by the National Association of Realtors showed that the Pending Home Sales in the U.S. contracted by 0.8% in May, the index plummeted to its lowest level since early October at 95.68. At the moment, the index is at 95.72, losing 0.5% on the day.
Technical outlook
With today's drop, the RSI on the daily graph for the pair fell to the oversold territory at 25. The last time this indicator fell below the 30 mark in mid-June, the pair recovered nearly 200 pips. 1.3000 (psychological level) now aligns as the first technical support ahead of 1.2970 (Jan. 31 low) and 1.2905 (Sept. 5, 2016, low). On the upside, 1.3100 (psychological level) could be seen as the first hurdle followed by 1.3180 (daily high) and 1.3225 (10-DMA).
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