USD/CAD recovers above 1.31 as US Dollar approaches 94

US Dollar Index gathers momentum in the NA session.
WTI stays in the red below $74.

Eren Sengezer FXStreet

The USD/CAD pair spent the first half of the day moving sideways in a tight 20 pip range below the 1.31 mark amid a lack of fresh fundamental catalysts. Despite the USD weakness witnessed earlier today, the loonie struggled to gather strength as crude oil's paused on Monday. However, a sharp increase in the US T-bond yields and a modest sell-off on crude oil lifted the pair to a session high above the 1.31 mark. As of writing, the pair was trading at 1.3105, adding 0.2% on the day.

An improved market sentiment on Monday boosted the 10-year T-bond yield to a daily high at 2.862% and helped the buck retrace the losses it recorded against its major rivals following last Friday's mixed employment report. At the moment, the US Dollar Index is sticking to small daily gains at 93.85.

Meanwhile, crude oil prices are having a difficult time setting direction on Monday. After closing the previous week virtually flat, the barrel of West Texas Intermediate is currently down 30 cents, or 0.5%, on the day at $73.50. Earlier today, Kuwait’s Oil Minister said that they would be producing more than enough oil to keep the market stable and added that there was no need for another OPEC meeting before the scheduled December summit.

Technical outlook

On the upside, the initial resistance for the pair aligns at 1.3200 (psychological level/20-DMA) ahead of 1.3265 (Jun. 29 high) and 1.3350 (Jun. 28 high). On the flip side, supports could be seen at 1.3040 (50-DMA), 1.3000 (psychological level) and 1.2930 (100-DMA).

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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