USD/CAD trades above 1.3250, looks to close higher for second straight day

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  • Crude oil rally loses steam on Friday.
  • US Dollar Index pares early losses, looks to close the week near mid-95s.
  • Annual core CPI remains steady at 2.2% in December in the U.S.

The USD/CAD pair extended its recovery into a second day on Friday and advanced to a three-day high of 1.3276. As of writing, the pair was moving sideways near 1.3260, adding 0.17% on a daily basis.

The commodity-sensitive loonie today came under a modest pressure as crude oil struggled to push higher with the barrel of West Texas Intermediate dropping back below the $52 mark and losing more than 1% on a daily basis.

On the other hand, after finding support near the 95 handle earlier this week, the US Dollar Index stayed in its range and now looks to close the day with small gains a little above the 95.50 mark. Earlier today, the monthly report published by the U.S. Bureau of Labor Statistics revealed that the CPI declines 0.1% on a monthly basis in December after staying unchanged in November. The core CPIi which excludes food and energy prices, rose 0.2% and 2.2% on a monthly and yearly basis, respectively, to come in line with experts’ forecasts.

Earlier this week, the BoC recognized the negative impact of low energy prices on the Canadian economy and adopted a cautious tone regarding further rate hikes to put some extra weigh on the CAD’s shoulders.

Technical levels to watch for

The pair could face the first resistance at 1.3275 (daily high) ahead of 1.3370 (50-DMA) and 1.3420 (Dec. 17 high). On the downside, supports are located at 1.3200 (psychological level), 1.3160 (Dec. 4 low) and 1.3125 (Nov. 16 low).

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