USD/CAD stuck in tight range ahead of the US tax vote

• DXY looks to stabilize ahead of the US tax vote.
• Oil little changed, limited impact on the CAD.
• The US House tax vote in focus ahead Canada CPI, US GDP.

The USD/CAD pair extends its overnight side trend into early Europe, with the rates fluctuating between gains and losses well below the 1.29 handle.

USD/CAD trades below daily pivot of 1.2864

The spot failed once again near 1.2875 resistance zone and drifted lower towards the midpoint of the 1.28 handle, as the renewed strength seen around oil prices lends support to the resource-linked Loonie. Oil prices continue to take advantage of the delay in the North Sea pipeline repair works and falling US crude inventories.

Moreover, the recent hawkish remarks from the BOC Governor Poloz also continue to underpin the sentiment around the Canadian dollar, capping further upside in the major. In an interview with BOC Governor Poloz published on the weekend in the Globe & Mail, the Canadian central bank chief said that his word of caution on the markets, doesn’t mean he is going to sit back and not go for the next rate hike.

On the USD-side of the story, the stalled recovery seen in the US dollar against its major peers amid increased cautiousness ahead of the House vote on the US tax reform bill, adds to the latest leg down in the CAD pair.

In the day ahead, the sentiment around the US dollar will continue to drive the pair until the releases of the US housing and current account data. However, the US House tax vote will hog the limelight later on Tuesday.

USD/CAD Technical View

The immediate support for the pair aligns at 1.2853/50 (10 & 5-DMA) ahead of 1.2838 (200-DMA) and 1.2812 (20-DMA). On the upside, resistances could be seen at 1.2892/93 (intermittent tops), 1.2915 (Oct 31 high) and 1.2950 (psychological levels).