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  • USD/CAD continues to fluctuate below 1.2100 on Wednesday.
  • US Dollar Index stays in the positive territory above 90.00.
  • Rising crude oil prices help CAD stay resilient.

The USD/CAD pair spent the Asian session moving in a narrow channel around 1.2070 but gained traction during the European trading hours. After reaching a daily high of 1.2088, however, the pair erased its recovery gains and was last seen posting small daily losses at 1.2063.

Rising crude oil prices support CAD

On Tuesday, USD/CAD slumped to its lowest level in six years as the surging crude oil prices provided a boost to the commodity-sensitive loonie. Nevertheless, the pair ended up closing the day flat with rising US Treasury bond yields supporting the greenback in the second half of the day.

After closing with modest gains on Tuesday, the US Dollar Index continued to edge higher and was up 0.16% at 90.06 at the time of press. However, the CAD stays resilient against its American counterpart as the barrel of West Texas Intermediate (WTI) stays in the positive territory above $68.

Later in the day, the Federal Reserve will release its Beige Book and investors will pay close attention to commentary regarding inflation expectations. On Tuesday, the ISM’s Manufacturing PMI report revealed that input prices continued to rise at an unprecedented pace in May  and triggered a rally in the US Treasury bond yields. A similar market reaction to the Fed’s publication could help the USD gather additional strength.

Technical levels to watch for