USD/CAD struggles around 1.3440 as WTI gains confront trade pessimism

With the US-China trade tensions questioning the rise in crude oil prices, the USD/CAD pair struggles around 1.3440 ahead of the European open on Thursday.

Despite witnessing more than expected reading of the weekly US crude oil stock, the energy benchmark stretched its latest recovery forward as tensions between the US and Iran dominate.

The US recently called off its non-emergency staff from Iraq smelling an attack from Iran. However, Iran’s foreign minister stated that the nation remains committed to the nuclear deal, which in turn turned some pessimism off the mark.

Weighing on the Canadian Dollar (CAD) is the present uncertainty over the US-China trade relations. The US President recently announced executive order barring foreign companies from telecommunication sector on a national security basis. The same is likely to adversely affect Chinese giant Huawei and may create further divide amid the world’s two largest economies.

It should also be noted that the US is in talks with Canada to help it avoid fresh tariffs on metals.

Looking forward, speech from the Bank of Canada’s (BOC) Governor Stephen Poloz, Canadian manufacturing sales and second-tier details of housing and manufacturing from the US are likely to entertain momentum traders for rest of the day.

Technical Analysis

A 50-day simple moving average (SMA) near 1.3390 and an upward sloping trend-line since late-February at 1.3360 seem crucial downside supports for the pair that holds the gate for its downturn to 1.3340 comprising 100-day SMA.

Alternatively, 1.3500 and the four-month-old ascending trend-line, at 1.3550, may limit the immediate upside of the pair ahead of highlighting 1.3565, 1.3620 and December 2018 highs near 1.3665.