USD/CAD recovers early gains on oil selloff, trades near 1.32
- Crude oil turns south on Monday after last week's impressive rally.
- US President Trump announces new sanctions on Iran.
- US Dollar Index stays flat on the day near the 96 mark.
The USD/CAD pair slumped to a daily low of 1.3175 earlier in the session but was able to stage a rebound as the commodity-sensitive loonie came under a renewed pressure amid falling crude oil prices. As of writing, the pair was trading at 1.3200, losing 0.17% on a daily basis.
After gaining nearly 10% last week, the barrel of West Texas Intermediate pushed higher earlier in the day but reversed its direction in the second half of the day on hopes of OPEC+ extending its output cuts. However, the U.S. President Trump announced new sanctions on Iran today and didn't allow the tension in the Middle East to ease, helping crude oil prices find support. At the moment, the WTI is still down around 1% on the day at $57.
On the other hand, the fact that the greenback is struggling to attract investors' attention as markets seem to be convinced that the Fed is cut its policy rate at its next meeting in July, makes it difficult for the pair to stage a decisive recovery.
Moreover, today's data from the U.S. showed that the Chicago Fed's National Activity Index improved slightly to -0.05 in May while the Dallas Fed Manufacturing Index plummeted to -12.1 in June to miss the market expectation of 4.8. The US Dollar Index was last seen posting small daily losses at 96.08.
Technical levels to watch for