USD/CAD remains directionless in weekly range below 1.3500

• Housing starts in Canada rose more than expected in April.
• Oil recovers modestly ahead of the weekly EIA report.
• US Dollar Index remains stuck in a tight range.

For the third straight day this week, the USD/CAD pair is having a difficult time determining a near-term direction as it continues to fluctuate in a relatively narrow channel below the 1.35 mark. As of writing, the pair was losing 0.5% on a daily basis at 1.3467.  

A modest rebound in crude oil prices and the upbeat housing market data from Canada helped the loonie gain traction in the last couple of hours. After closing the previous day nearly 2% lower, the barrel of West Texas Intermediate is staging a recovery ahead of the weekly EIA report and was last seen adding 0.4% on a daily basis at $61.65 to help the commodity-related loonie find demand. Additionally,  the Canadian Mortgage and Housing Corporation reported that housing starts in Canada increased by 235.5K on a yearly basis in April to surpass the market expectation of 196.4K.

On the other hand, the greenback is staying quiet in the absence of significant macroeconomic releases and fundamental developments on Wednesday, causing the US Dollar Index to stay in its recent range a little above 97.50 and allowing the loonie’s market valuation to drive the pair’s action.

The next important data from Canada will be Friday’s jobs report. Additionally, markets will be paying close attention to the inflation data from the U.S. on that same day as well.

Technical levels to watch for