USD/CAD extends losses below 1.32 as USD loses traction post-CPI data

• Annual core-CPI in the U.S. rises 2.3% in June.
• New housing price index in Canada stays unchanged on a monthly basis in May.
• US Dollar Index retreats to mid-94s.

After spending the majority of the day moving sideways near the 1.32 handle, the USD/CAD pair came under pressure in the early NA session and touched a fresh session low at 1.3150 as the greenback started to weaken following the inflation data releases. As of writing, the pair was trading at 1.3170, losing 0.3% on the day.

The data released by the U.S. Bureau of Labor Statistics on Thursday showed that inflation measured by the CPI rose 0.1% on a monthly basis in June to miss the market expectation of 0.2%. On the other hand, the core version of the CPI, which strips the volatile food and energy prices, increased 0.2% and 2.3% on a monthly and yearly basis respectively. Nonetheless, the greenback struggled to preserve its strength as it seemed like investors were disappointed after seeing the sharp increase in the PPI data on Wednesday.

In the meantime, according to Statistics Canada, the new housing price index in May stayed unchanged to miss the market expectation of 0.2%.

Despite the USD sell-off, however, the pair’s losses were limited as the loonie’s valuation continues to be affected by crude oil prices. After losing nearly 5% on Wednesday, the barrel of West Texas Intermediate failed to make a decisive recovery and was last seen trading at $70.40, where it was virtually unchanged on the day.

Technical outlook

On the downside, the initial support for the pair aligns at 1.3150 (daily high) ahead of 1.3000 (psychological level) and 1.2930 (100-DMA). Resistances could be seen at 1.3200 (psychological level/20-DMA/daily high), 1.3265 (Jun. 29 high) and 1.3350 (Jun. 28 high).