USD/CAD edges higher toward 1.2700 as WTI retreats from multi-year highs

• USD/CAD closed the previous week with small losses.
• WTI touched its highest level since October 2018 near $68.
• Rising US Treasury bond yields help USD preserve its strength.

Despite the broad-based USD strength, the USD/CAD pair closed the previous week in the negative territory as surging crude oil prices helped the commodity-related CAD stay resilient against the greenback. On Monday, the pair started to edge higher on the back of broad USD strength and was last seen gaining 0.25% on the day at 1.2690.

Oil rally loses stream

Last week, the OPEC+ decided to keep its oil output steady through April and provided a boost to crude oil prices. The barrel of West Texas Intermediate touched its highest level since October 2018 at $67.94 on Monday. However, with WTI losing its bullish momentum and turning flat on the day near $66.20, the USD’s market valuation started to impact USD/CAD’s movements.  

Supported by rising US Treasury bond yields, the US Dollar Index is up 0.3% on the day at 92.25. In the meantime, Wall Street’s main indexes remain on track to start the day lower with the S&P 500 Futures falling more than 0.5% ahead of the opening bell. If safe-haven flows take control of financial markets in the second half of the day, the greenback could gather further strength and help USD/CAD climb above 1.2700.

The only data featured in the US economic docket on Monday will be January Wholesale Inventories, which is likely to be ignored by market participants.

Technical levels to watch for