USD/CAD: WTI strength probes bulls above 1.2300, ISM Services PMI in focus

USD/CAD consolidates Friday’s losses around 1.2340 amid a sluggish Asian session on Tuesday. In doing so, the Loonie pair extends the previous day’s recovery movers amid mildly optimistic market sentiment. However, strong oil prices, Canada’s main export, challenge the pair buyers of late.

Global oil producers failed to reach an agreement during the latest OPEC+ meeting, indicating the continuation of the restrained output policies, by the end of Monday. The same propelled WTI prices to the fresh high since October 2018 above $76.00.

Read: WTI moves to fresh cycle highs on OPEC meeting cancellation

Elsewhere, the Bank of Canada’s quarterly Business Outlook Survey cited improvement in the inflation expectations. However, USD/CAD prices paid a little heed to release amid US dollar rebound following Friday’s downside, due to the mixed US employment report for June.

It’s worth noting that the risk appetite improved of late even as the coronavirus (COVID-19) concerns offer complex details. While the UK and Germany seem optimistic over the covid conditions going forward, fears of a fresh virus variant, namely Epsilon, pose a threat to the risk-on mood as it shows resistance to vaccines during the initial observance in California.

Amid these plays, S&P 500 Futures print mild gains whereas the US 10-year Treasury yields lick their wounds around 1.43% after Friday’s downbeat performance.

Given the US traders’ return after a long weekend, coupled with the ISM Services PMI for June, USD/CAD may struggle to keep the recovery moves. However, risk catalysts and data are the key for fresh impulse.

Read: ISM Services PMI Preview: Why the inflation component could trigger a dollar rebound

Technical analysis

A nine-day-old rising support line, around 1.2330, directs USD/CAD buyers toward the 100-DMA level of 1.2381.