USD/CAD turns positive on the day above 1.3450 despite rising oil prices

• WTI recovers toward $57 area.
• Broad USD strength on Thursday doesn’t allow the pair to post losses.
• US Dollar Index surges to highest level since mid-December.

The USD/CAD pair rose to its highest level since early January on Wednesday at 1.3457 and spent the first half of the day retracing a small part of its recent rally. However, with the greenback outperforming its major rivals, the pair pulled away from the daily low that it set at 1.3412 and turned positive on the day. As of writing, the pair was trading at 1.3448, adding 0.06% on a daily basis.

After posting modest losses on Tuesday and Wednesday, crude oil prices gained traction today and the barrel of West Texas Intermediate recovered to $57 area to help the commodity-sensitive loonie find demand earlier in the day. At the moment, WTI is up nearly 1% on the day at $56.70.

On the other hand, the selling pressure surrounding major European currencies allowed the buck to gather strength on Thursday. The dovish shift in the ECB’s policy outlook reminded investors of the diverging monetary policies between the Fed and other major central banks. In its policy statement, the ECB announced that it was expecting to keep the interest rate steady at least until the end of the year and slashed its 2019 growth forecast to 1.1% from 1.7% seen in December.

The US Dollar Index rose to its highest level since December 17 at 97.50 and was last seen at 97.46, gaining 0.6%. Meanwhile, today’s data from the U.S. revealed that weekly jobless claims decreased by 3,000 to 223,000 in the week ending February 25 and the unit labour costs rose by 2% in the fourth quarter to surpass the analysts’ estimate of 1.6%.

Technical levels to consider