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  • USD/CAD is struggling to find direction on Tuesday.
  • WTI is staging a decisive recovery following Monday’s slump.
  • US Dollar Index is clinging to small daily gains above 93.00.

The USD/CAD pair edged higher toward 1.3150 during the Asian trading hours on Tuesday but failed to preserve its bullish momentum as rising crude oil prices helped the commodity-related CAD gather strength. As of writing, the pair was virtually unchanged on a daily basis at 1.3112.

The barrel of West Texas Intermediate (WTI) lost more than 2.5% on Monday after Libya announced that force majeure at its largest oilfield was lifted. However, after the data from China showed that crude oil imports rose by 5.5% in September, the WTI staged a decisive rebound and was last seen gaining 1.8% on the day at $40.20.

DXY clings to modest gains as focus shifts to US inflation data

On the other hand, the sour market mood amid heightened concerns over the US lawmakers failing to reach an agreement on the next coronavirus relief bill is helping the greenback find demand as a safe-haven and stay resilient against its rivals. 

Ahead of the Consumer Price Index (CPI) data from the US, the US Dollar Index is up 0.15% on the day at 93.18. Markets expect the core CPI to edge higher to 1.4% in September from 1.3% in August.

Meanwhile, S&P 500 futures are posting small daily losses, suggesting that Wall Street’s main indexes are likely to start the day little changed. A selloff in the US stock markets could provide an additional boost and keep USD/CAD’s downside limited even if crude oil rally continues in the American session.

Technical levels to watch for