USD/CAD turns negative near mid-1.28s, stays in daily range

• WTI edges lower toward $57 in the NA session.
• US T-bond yields help DXY retake the 93 mark.
• USD/CAD struggles to find direction.

After dropping to a daily low at 1.2840 during the European trading hours, the USD/CAD pair staged a recovery but failed to preserve its momentum and encountered a resistance at 1.2880. As of writing, the pair was trading at 1.2854, losing 0.09% on the day.

The US Dollar Index, which started the week with a bearish gap and continued to push lower as investors took their profits before amid the uncertainty surrounding the legalization of the tax overhaul bill. After setting its daily low at 92.92 in the early NA session, the DXY gained traction and started to retrace its losses supported by the robust performance of the 10-year US T-bond yield, which is now up 1.05% on the day. At the moment, the index is still down 0.33% at 93.15.

Meanwhile, the positive impact of concerns over supply disruptions in Nigeria and Forties pipeline on crude oil prices faded away, forcing the barrel of West Texas Intermediate to erase its daily gains and not allowing the commodity-sensitive loonie to gather further strength against its rivals. The barrel of WTI was last seen testing $57 handle, dropping 0.6% on the day.

With no significant macroeconomic data releases from Canada nor the United States, the pair's price action is likely to continue to track crude oil prices and the DXY.

Technical outlook

The first critical support for the pair is located at 1.2840 (200-DMA). A daily close below that level could open the door to 1.2775 (50-DMA) and 1.2700 (psychological level). On the upside, resistances align at 1.2880 (daily high), 1.2915 (Oct. 31 high) and 1.3000 (psychological level).