USD/CAD struggles to find direction, fluctuates in tight range above 1.3250

US Dollar Index loses steam ahead of 97.
WTI posts small daily gains ahead of API data.
Annual core PPI in US comes in at 2.3% to match expectations.

Eren Sengezer FXStreet

For the second straight day, the USD/CAD pair is having a difficult time setting its next short-term direction amid a lack of fresh significant fundamental drivers. As of writing, the pair was virtually unchanged on a daily basis at 1.3265.

Today's data from the U.S. showed that the core Producer Price Index (PPI) ticked down to 2.3% on a yearly basis in May but came in line with the market expectation. Although the initial reaction lifted it to its highest level of the day at 97.88, the US Dollar Index struggled to preserve its bullish momentum and retraced its daily advance to turn flat at 96.75. Other data today revealed that business sentiment improved slightly in May with NFIB Business Optimism Index rising to 105 from 103.5 in April.

On the other hand, in the absence of macroeconomic data releases from Canada, markets shifted their attention to crude oil prices but couldn't get a directional clue for the commodity-sensitive loonie. Ahead of the weekly API crude oil market report from the U.S., the barrel of West Texas Intermediate is adding only 0.25% on a daily basis at $53.55.

According to TD Securities analysts, Thursday's household balance sheet data for the first-quarter from Canada could get some market attention. "Elsewhere, top-tier US data (CPI, retail sales) will garner attention as markets place bets on nearterm Fed easing," analysts further noted.

Technical levels to watch for

The pair could face the initial resistance at 1.3280 (Jun. 10 high) ahead of 1.3330 (200-DMA) and 1.3420 (50-DMA). On the downside, supports align at 1.3240 (Jun. 10 low), 1.3200 (psychological level) and 1.3130 (Mar. 1 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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