- WTI loses traction after making a modest recovery.
- DXY advances toward 94.70 ahead of US data.
The USD/CAD pair edges higher toward the 1.32 handle ahead of the manufacturing PMI data from the United States. As of writing, the pair was trading at 1.3190, adding 0.42% on the day.
Falling crude oil prices on Monday continue to hurt the demand for the commodity-sensitive loonie. Over the weekend, the U.S. President Donald Trump claimed, via Twitter, that he spoke to King Salman of Saudi Arabia and convinced him to increase their oil production by 2 million barrels per day to make up for the supply disruptions in Iran and Venezuela.
The barrel of West Texas Intermediate opened the week with a bearish gap and made a modest recovery, but failed to stay above the $74 mark. As of writing, the barrel of WTI was trading at $74.65, down 50 cents on the day.
On the other hand, the first trading day of the second half of the year brought a fresh USD buying wave with investors looking to take advantage of the Fed’s hawkish stance and the expectations of two more rate hikes.
With Canadian markets being closed due to Canada day, crude oil and the USD valuation are likely to continue to impact the pair’s movements in the remainder of the day. Later in the NA session, Markit and ISM will be both releasing their manufacturing PMI data.
Technical outlook
The immediate resistance for the pair aligns at 1.3200 (psychological level) ahead of 1.3265 (Jun. 29 high) and 1.3350 (Jun. 28 high). On the downside, supports could be seen at 1.3125 (Jun. 29 low), 1.3000 (psychological level/50-DMA) and 1.2920 (100-DMA). Meanwhile, with today’s upsurge, the RSI indicator on the daily chart rose above the 50 mark, suggesting that the bullish momentum is building up.
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