USD/CAD struggles to move away from daily lows on oil recovery

Eren Sengezer FXStreet

After easing to a daily low at 1.3433, the USD/CAD tried to rebound during the NA session as the greenback gathered strength on positive macro data but failed to gain momentum. As of writing, the pair is trading at 1.3460, still losing 0.18% on the day.

Boosted by the solid consumer spending numbers from the U.S., the GDP growth for the first quarter of 2017 beat the expectations on Friday, increasing the odds of a June rate hike and providing demand for the greenback. Following the data, the US Dollar Index reached its weekly high at 97.46. At the moment, the index is at 97.45, up 0.3% on the day.

Despite the upsurge witnessed in the greenback against most of its competitors, the loonie remained resilient as rising crude oil prices kept the demand for the commodity-linked CAD high. After losing more than 5% on Thursday on OPEC disappointment, the barrel of West Texas Intermediate is rising towards the important $50 handle ahead of the Baker Hughes rig count data. As of writing, the barrel of WTI was trading at $49.62, gaining 1.5% on the day.

OPEC supply cut extension has disappointed the oil market – Danske Bank

The pair could have a difficult time setting a short-term direction in the remainder of the session if crude oil prices continue to support the loonie against the greenback.

Technical levels to consider

Despite yesterday's strong upsurge, the pair remains in its 10-day-old downtrend seen on the daily graph. 1.3515 (50-DMA/Fibo 50% retracement of April-May rise) could be seen as a strong resistance ahead of 1.3600 (psychological level/20-DMA) and 1.3720 (May 14 high). On the flip side, supports align at 1.3390 (May 25 low), 1.3340 (200-DMA) and 1.3300 (psychological level).

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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