USD/CAD retreats below 1.2500 after modest rebound

USD/CAD turned south after rebounding above 1.2530 earlier in the day.
US Dollar Index clings to modest daily gains around 91.30.
WTI recovers portion of weekly losses, trades around $61.50.

Eren Sengezer FXStreet

After losing more than 100 pips on Wednesday, the USD/CAD pair staged a technical correction and rose to a daily high of 1.2535 before losing its momentum. As of writing, the pair was down 0.1% on a daily basis at 1.2483.

The Bank of Canada's (BoC) hawkish policy outlook provided a boost to the loonie on Wednesday and triggered a sharp drop in USD/CAD. In addition to a reduction of bond purchases, the BoC noted that current projections pointed to a rate hike in the second half of 2022. Furthermore, the bank revised its GDP growth forecasts higher for 2021, 2022 and 2023.

Crude oil recovery supports CAD

On Thursday, the greenback gained traction with Wall Street's main indexes starting the day in the negative territory. The US Dollar Index (DXY), which tested 91.00 earlier in the day, climbed to 91.38 in the early American session. Currently, the DXY is up 0.2% at 91.30.

Despite the renewed USD strength, USD/CAD reversed its direction as rising crude oil price provided a boost to the commodity-sensitive CAD. At the moment, the barrel of West Texas Intermediate is up nearly 1% on the day at $61.58 and looks to snap a two-day losing streak.

There won't be any macroeconomic data releases from Canada on Friday. Investors will keep a close eye on New Home Sales and preliminary Markit Manufacturing and Services PMI figures from the US.

Technical levels to watch for

USD/CAD

Overview
Today last price	1.2482
Today Daily Change	-0.0016
Today Daily Change %	-0.13
Today daily open	1.2498

Trends
Daily SMA20	1.256
Daily SMA50	1.2583
Daily SMA100	1.2672
Daily SMA200	1.2941

Levels
Previous Daily High	1.2654
Previous Daily Low	1.246
Previous Weekly High	1.263
Previous Weekly Low	1.2477
Previous Monthly High	1.274
Previous Monthly Low	1.2365
Daily Fibonacci 38.2%	1.2534
Daily Fibonacci 61.8%	1.258
Daily Pivot Point S1	1.2421
Daily Pivot Point S2	1.2343
Daily Pivot Point S3	1.2227
Daily Pivot Point R1	1.2615
Daily Pivot Point R2	1.2731
Daily Pivot Point R3	1.2809

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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