USD/CAD extends pullback from 12-week old resistance as oil holds strength

• Greenback weakness and crude recovery please the Loonie buyers.
• An upside clearance of 1.3420 can trigger the quote’s rally to 1.3470 and 1.3500.

USD/CAD trades near the intra-day low of 1.3385 during the early Asian session on Tuesday. The quote extended the previous pullback from a downward sloping trend-line since early January as oil prices remain strong. The US housing and consumer confidence numbers coupled with API weekly crude inventories will be next in the USD/CAD traders’ radar to watch.

The USD/CAD pair took a U-turn from 12-week long descending trend-line on Monday as the US Dollar (USD) weakened across the board on recession fears signaled by the 10-year and 3-month treasury yields.

During early Tuesday, investors focused on soft USD as a favor to extend support for rest of the major currencies and commodities. The greenback buyers gave little importance to the comments from the Federal Reserve Bank of Boston President Eric Rosengren that said the Fed’s dot-plot is not a promise of policy direction.

Crude, Canada’s main export, managed to remain strong as weaker greenback favors commodities. Industry oil stock data from the American Petroleum Institute (API) for the week ended on March 22 will gain oil traders’ attention and could have its impact on the USD/CAD pair as well. The inventory report showed -2.1333 million barrels of drawdown during earlier release.

Additionally, February month housing start and building permits, coupled with January month house price index and the current month consumer confidence survey, from the US will also gain market attention. The housing starts may soften to 1.215M from 1.230M with the building permits likely being at 1.3000M versus 1.317M (revised) prior and the housing price index expected to be unchanged at 0.3%. Also, the confederation board’s consumer confidence survey might also affect the Loonie if it registers drastic moves from 131.4 earlier.

USD/CAD Technical Analysis

USD/CAD requires a successful break of 1.3420 resistance in order to challenge early-month high around 1.3470 and then aim 1.3500 round-figure. It should also be noted that 1.3570 can please buyers past-1.3500.

On the downside, 1.3370 acts as immediate support ahead of highlighting 1.3330 and 50-day simple moving average (SMA) near 1.3270.