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  • US Dollar Index loses traction in the last hour.
  • WTI clings to small daily gains near $55 handle.
  • Coming up: Consumer Price Index (CPI) data from US.

The USD/CAD pair started the week in a calm manner and closed the day with small gains above the 1.32 handle before stretching higher on Tuesday. After reaching a session high of 1.3265, however, the pair reversed its direction and started to retrace its daily advance. As of writing, the pair was up 0.08% on the day at 1.3250.

Following Monday’s sharp drop, the 10-year US Treasury bond has gone into a consolidation phase and allowed the Greenback to stage a technical correction. Nevertheless, in the absence of fundamental drivers, the US Dollar Index, which rose to 97.64 earlier in the session, turned flat on the day at 97.40 to cause the bullish pressure to lose strength.

Eyes on US inflation data

In the early trading hours of the American session, the US Bureau of Labor Statistics will release its inflation report. Markets expect the core Consumer Price Index (CPI) that excludes volatile food and energy prices to remain unchanged at 2.1% on a yearly basis in July. A softer-than-expected CPI reading could weigh on the USD and force the pair to edge lower toward the 1.32 handle.

On the other hand, after posting daily gains for the third straight trading day on Monday, the barrel of West Texas Intermediate is clinging to small gains near $55 ahead of the weekly crude oil stock report published by the American Petroleum Institue and helps the commodity-related Loonie stay resilient against its American counterpart.

Technical levels to watch for