USD/CAD drops toward 1.32 as USD sell-off gains momentum

• The US Dollar Index breaks below 96.50.
• WTI recovers to $56 to support loonie.

The USD/CAD pair broke below its daily trading range in the last hour and fell to a fresh 6-day low of 1.3213. As of writing, the pair was trading a couple of pips above that level, losing 0.19% on a daily basis.

The selling pressure surrounding the greenback gathered strength in the last hour after several news outlets claimed that the U.S. was pressing for a stable yuan exchange rate in trade talks with China. Additionally, the 10-year T-bond yield extended its slide to put additional weight on the greenback’s shoulders. The US Dollar Index, which advanced to its highest level of 2019 last week above the 97 mark, was last seen down 0.32% on the day at 96.46.

Additionally, the improved sentiment in the session helped crude oil prices gain traction and erase its daily losses to allow the loonie to outperform the dollar. Ahead of the weekly API stock report, the barrel of West Texas Intermediate is flat on the day near $56.

There won’t be any macroeconomic data released from Canada on Wednesday and the DXY is likely to stay as the primary driver of the pair’s action especially after the FOMC publishes the minutes of its last meeting tomorrow.

Key technical levels