- WTI falls below $65 after EIA reports huge inventory build.
- US Dollar Index fails to reach 97, starts retracing its gains.
Although the greenback is having a difficult time preserving its bullish momentum, the USD/CAD pair extended its gains as the commodity-sensitive loonie continued to weaken amid falling crude oil prices. The pair recently touched its fresh session high at 1.3161 and last seen trading a few pips below that level, adding 0.77% on the day.
The weekly report released by the U.S. Energy Information Administration (EIA) on Wednesday revealed that commercial crude oil inventories increased by 6.8 million barrels in the week ending August 10 compared to analysts’ expectation of a draw of 2.5 million barrels. With the initial market reaction, crude oil prices came under a heavy selling pressure and the barrel of West Texas Intermediate broke below the $65 mark for the first time since late June. At the moment, the barrel of WTI is trading at 64.80, losing 2.75% on the day.
Earlier in the session, the broad-based USD strength seemed to be the primary driver of the pair’s price action. After the retail sales came in at 0.5% to beat the market expectation of 0.1%, the US Dollar Index reached the highest level of the year just a tad below the 97 mark. However, other data pointed out to a slowdown in the industrial production growth and forced the index to lose its steam. As of writing, the DXY is still up 0.25% on the day at 96.90.
Technical outlook
The pair could encounter the first resistance at 1.3200 (psychological level) ahead of 1.3285 (Jul. 19 high) and 1.3385 (Jun. 27 high). On the downside, supports are located 1.3200 (50-DMA), 1.31.05 (Aug. 13 low) and 1.3050 (daily low/20-DMA).
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