USD/CAD fades the spike above 1.37 as oil recovers
The USD/CAD pair caught a fresh buying wave at the beginning of the NA session as the pressure on the price of crude oil started to hurt the commodity-linked loonie. After reaching its session high at 1.3720, the pair quickly changed its direction and eased back below the 1.37 handle. As of writing, the pair was trading at 1.3680, up 0.22% on the day.
After starting the day around mid-$46's, the barrel of West Texas Intermediate inched higher to $47 area in the European session but couldn't hold on to its daily gains. As the crude oil production continues to rise in the U.S. with the latest data showing an increase of six in the total number of active oil rigs to 703, the supply glut concerns cap the gains in crude oil prices. However, as a recent report by Reuters suggested that the OPEC, non-OPEC producers are considering a nine-month extension to the supply cut deal.
- Oil: Prices slumped to the lowest level since April 2016 - BBH
On the other hand, the fact that the US Dollar Index was able to add to its gains after starting the week with a bullish gap, help the pair float in the positive area for now. As of writing, the index was up 0.42% on the day, at 98.83. Now with the French presidential election out of the way, investors could turn their attention to the Fed and the expectation for a June hike.
Technical outlook
With a decisive move above the 1.37 mark, the pair could aim for 1.3735 (2016, Feb. 25 high) ahead of 1.38 (psychological level) and 1.3860 (2016, Feb. 24 high). To the downside, supports could be seen at 1.3600 (psychological level/Dec. 28 high), 1.3540 (Apr. 27 low) and 1.3410 (Apr. 24 low).
- USD: Strong for JPY and CAD, but weak against GBP - BBH