USD/CAD steadies near mid-1.31s, looks to close the week flat

In the early trading hours of the NA session, the USD/CAD pair lost more than 100 pips to touch its lowest level since Tuesday at 1.3115. Following that sharp fall, the pair retraced a small portion of its losses and started moving sideways near mid-1.31s, where it was down nearly 1% on the day.

During the first half of the day, the pair stayed relatively quiet as the broad-based greenback weakness was offset by the falling crude oil prices. The data from Canada on Friday showed that the annual CPI rose to 2.5% in June from 2.2% in May to surpass the market expectation of 2.4%. Furthermore, retails sales in May rose by 2% following May's 1.2% contraction. The upbeat data helped the loonie gather strength and forced the pair to erase its weekly gains. 

On the other hand, US President Trump repeated his comments about the Fed's monetary policy via Twitter on Friday and added extra weight on the USD. Moreover, FOMC member Bullard argued that a flattening yield curve was a warning sign and the Fed should hold off rate hikes to allow the economic expansion to gain momentum. The US Dollar Index was last seen at 94.60, where it was down 0.6% on the day.

Meanwhile, after recording modest recovery gains on Thursday and Friday, crude oil reversed its course on Friday and the barrel of West Texas Intermediate dropped to $67.70. Although news of oil workers in 106 North Sea oil platforms possibly going for a strike allowed a late recovery, the barrel of WTI was still down nearly 2%, or $1.3, on the day near $68.10.

Technical outlook

Wİth today's slump, the RSI indicator on the daily chart eased to 50 mark, suggesting that the bulls' lost their dominance over the pair's price action. The pair could face the first technical support at 1.3110 (daily low/50-DMA) ahead of 1.3065 (Jul. 9 low) and 1.3000 (psychological level). On the upside, resistances align at 1.3200 (psychological level), 1.3290 (daily high) and 1.3385 (Jun. 27 high).