USD/CAD recovers to 1.3150 level supported by weaker oil prices

The USD/CAD pair remained under some selling pressure for the fourth consecutive session, albeit has managed to defend the very important 200-day SMA support near 1.3100 handle.

Currently trading around 1.3150 region, easing fears of changes to the NAFTA trade accord between Canada and the US, following Tuesday's comments from an advisor to Trump that Canada has a "very special status", underpinned the Canadian Dollar. 

On Tuesday, the pair came under intense selling pressure and dropped to 1.3100 neighborhood after Trump ordered to revive Keystone XL and Dakota Access oil pipelines. The pair, however, managed to bounce off lows in wake of retracing crude oil prices on the back of bearish API report. 

Weaker oil prices, with WTI crude oil trading with a loss of over 0.5%, has failed to lend any additional support to the commodity-linked currency - Loonie, and has limited the pair's downslide, at least for the time being. 

Traders now look forward to the official EIA report on domestic crude stockpiles, which would provide some fresh impetus for the pair's movement on Wednesday, in absence of any major fundamental drivers from the US and Canada. 

Technical levels to watch

Renewed weakness below 1.3120 level (session low) is likely to drag the pair back towards 200-day SMA support near 1.3100 handle, which if broken would increase the vulnerability to drop back towards 1.3040 strong horizontal support.

On the upside, 1.3170-75 area now seems to hinder any immediate recovery move above which the pair is likely to surpass 1.3200 handle and head towards 1.3245-50 intermediate resistance, en-route 100-day SMA hurdle near 1.3280 region.