- USD/CAD reversed its direction after rising above 1.2600.
- Falling US Treasury bond yields weigh on the USD.
- US Dollar Index touched a fresh multi-week low below 92.00.
The USD/CAD pair climbed to a daily high of 1.2626 during the European trading hours but turned south in the second half of the day. As of writing, the pair was virtually unchanged on a daily basis at 1.2561.
USD weakens after US inflation report
Earlier in the day, rising US Treasury bond yields provided a boost to the greenback and the US Dollar Index (DXY) advanced to a session top of 92.32 with the benchmark 10-year US T-bond yield increase by more than 1%.
However, the DXY reversed its direction as the 10-year T-bond yield dropped into the negative territory after the US Bureau of Labor Statistics reported that the annual Core Consumer Price Index edged higher to 1.6% in March. Although this reading came in slightly higher than the market expectation of 1.5% it remained below the Fed’s 2% target and hurt the USD. Currently, the DXY is down 0.1% at 92.00.
On the other hand, the barrel of West Texas Intermediate (WTI) is clinging to daily gains above $60 and helping the commodity-related loonie preserve its strength. In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) said it raised the forecast for global oil demand growth in 2021 to 5.95 million barrels per day (bpd) from 5.89 million (bpd) previously.
There won’t be any other macroeconomic data releases in the remainder of the day and the USD’s market valuation is likely to remain the primary driver of USD/CAD’s movements.
Technical levels to watch for