USD/CAD recovers back above 1.36 as oil erases gains

Eren Sengezer FXStreet

The selling pressure on the USD/CAD that came with the rising oil prices quickly faded away during the NA session as the greenback remained bid against its competitors ahead of the announcement of Trump's administration's new tax plan. As of writing, the pair was trading at 1.3605, up 0.24% on the day.

Earlier during the session, the barrel of WTI leaped above $50 after EIA's weekly report revealed a higher than expected drop in crude oil stocks and contracting output levels in the United States. Boosted by the WTI, the loonie gained strength against the greenback, pushing the pair to a new session low at 1.3540. However, WTI failed to hold above $50 level and erased most of its initial winnings, allowing the USD/CAD to catch some fresh bids.

U.S. commercial crude oil inventories decreased by 3.6 million barrels - EIA

Additionally, the US Dollar Index continues to hold above the 99 mark, reflecting a general market interest on the greenback and providing support to the pair as well. At the moment the index is up 0.38%, at 99.10.

Technical outlook

With a clean break above 1.3625 (Apr. 25 high/14-month high), the pair could target 1.37 (psychological level) ahead of 1.3735 (2016, Feb. 25 high). To the downside, supports align at 1.3600 (psychological level/Dec. 28 high), 1.3540 (daily low) and 1.3410 (Monday's 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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