USD/CAD retreats below 1.33 on crude oil recovery

• Latest OPEC headlines trigger  a recovery in crude oil prices.
• USD/CAD fails to hold above 1.33.
• US Dollar Index turns negative below 94.70.

After breaking above the 1.33 mark for the first time in nearly a year, the USD/CAD pair lost its traction and retraced its daily gains in the last hour as the commodity-sensitive loonie started taking advantage of the rising crude oil prices. As of writing, the pair was virtually unchanged on the day at 1.3280.

Since the start of the week, contradictory comments from OPEC officials have been impacting crude oil’s price action. Earlier today,  Saudi Arabia’s crown prince Mohammed bin Salman argued that producers needed to discuss bringing more supply to the market. On the other hand,  Iran’s OPEC Governor, Hossein Kazempour, said that OPEC and its allies should stick to existing oil supply cut deal at least until the end of the year.

The latest headlines came from  Secretary general of OPEC, Mohammed Sanusi Barkindo, who stated that he was confident that they would be able to reach a deal on Friday.

Crude oil prices reacted positively to Barkindo’s remarks and the barrel of West Texas Intermediate quickly recovered above the $65 mark. As of writing, the barrel of WTI was trading at $65.70, adding 80 cents on the day.

On the other hand, the US Dollar Index, which failed to break above the 95 mark for the second day in a row on Wednesday, reversed its course in the early NA session and turned negative near 94.60. The data from the U.S. showed that the current-account deficit increased to $124.1 billion in the first quarter of 2018 from $116.2 billion in the last quarter of 2017.

Later in the session, the EIA is going to publish its weekly inventory data. A higher-than-expected draw in crude stocks could provide an additional boost to crude oil prices and drag the pair lower.

Technical levels to consider

On the upside, the initial resistance  aligns at  1.3310 (daily  high) ahead of  1.3340 (Jun. 21, 2017, high) and 1.3400 (psychological level). On the downside, supports could be seen at 1.3200 (Jun. 19 low/psychological level), 1.3115 (Jun. 15 low) and 1.3035 (20-DMA).