- US Dollar Index retraces large part of daily advance.
- Upbeat data from the U.S. help the buck limit its losses.
- WTI clings to recovery gains near $53.
The USD/CAD pair rose to its highest level in more than two weeks at 1.3375 earlier today but struggled to push higher as the greenback lost its bullish momentum in the last few hours. As of writing, the pair was virtually unchanged on the day at 1.3340.
The US Dollar Index, which recovered all of the losses it suffered in the first half of the week, climbed to a 20-day high of 96.58 on Thursday but reversed its course as the EUR/USD pair staged a strong rebound following ECB President Draghi’s remarks on the policy outlook. However, the upbeat macroeconomic data releases from the U.S. helped the DXY stay in the positive territory. At the moment, the index was up 0.15% on the day at 96.25.
The preliminary data published by the IHS Markit on Thursday revealed that the business activity in both the manufacturing sector and the service sector in the U.S. expanded at a faster pace than expected in January. Furthermore, the weekly jobless claims this week fell to its lowest level in 50 years at 199K.
- US: Markit Manufacturing PMI improves to 54.9 (preliminary) in January vs 53.5 expected.
- US: Markit Services PMI eases to 54.2 (preliminary) in January, beats market estimate of 54.1.
Meanwhile, ahead of the weekly EIA report, the barrel of West Texas Intermediate is adding nearly 1% on the day and trading a little below $53 supporting the commodity-sensitive loonie for the time being.
Key technical levels
The initial resistance for the pair aligns at 1.3375/85 (daily high/50-DMA) ahead of 1.3420 (Dec. 17, 2018, high) and 1.3500/1.3490 (psychological level/Jan. 4 high). On the downside, supports are located at 1.3330 (daily low), 1.3300 (Jan. 22 low) and 1.3250 (Jan. 21 low).