USD/CAD turns red below mid-1.25s as WTI pushes above $64

DXY drops below 92 in NA session.
WTI surges to new multi-year highs above $64.
Canadian Foreign Minister is optimistic about NAFTA talks.

Eren Sengezer FXStreet

After edging higher towards the 1.26 mark and refreshing its best level since December 29 at 1.2590, the USD/CAD pair reversed course in the first half of the NA session. As of writing, the pair was trading at 1.2545, down 0.03% on the day.

The negative market sentiment and the US Dollar Index's ability to stay above the 92 mark fueled the pair's rise on Wednesday. However, the greenback started to weaken against its rivals after today's data showed that the annual core-PPI eased to 2.3% from 2.5% in December and missed the market estimate of 2.4%. As of writing, the DXY was at 91.67, losing 0.48% on the day.

On the other hand, the commodity-sensitive loonie gathered strength amid rising crude oil prices. Following this week's EIA and API reports, both of which showed a larger-than-expected draw in crude oil inventories in the U.S., the barrel of WTI preserved its bullish momentum and recently rose to its highest level in more than three years at $64.28. As of writing, the barrel of WTI was trading a couple of cents below that level, adding 1.15% on the day.

Meanwhile, Chrystia Freeland, Canada's Minister of Foreign Affairs, crossed the news wires in the last hour, saying that it would be absolutely possible to have a positive outcome from the next round of NAFTA talks.

Technical levels to consider

The initial hurdle for the pair aligns at 1.2635 (100-DMA) ahead of 1.2710 (50-DMA) and 1.2800 (psychological level/Dec. 22 high). On the downside, supports could be seen at 1.2500 (psychological level), 1.2430 (Jan. 10 low) and 1.2355 (Jan. 5 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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