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USD/CAD tries to extend rally above 1.36 as WTI slips below $45

  • The barrel of West Texas Intermediate falls nearly 2% today.
  • US Dollar Index climbs toward the 97 mark.
  • Markit Manufacturing PMI reports from both Canada and the U.S. are next.

After falling to the 1.3570 area during the European trading hours, the USD/CAD pair switched its direction and reclaimed the 1.36 mark boosted by the combination of falling crude oil prices and a stronger USD. As of writing, the pair was virtually unchanged on the day at 1.3640.

Crude oil prices extended the recovery that started in the last trading day of the year today with the barrel of West Texas Intermediate rising all the way up to $46.50 and helped the commodity-sensitive loonie starts correcting last week's rally. However, amid concerns over an economic slowdown in China, the WTI, once again, came under a bearish pressure and fell below the $45 mark. In a recently published article, the PBoC said that the trend of the economic slowdown was ongoing and the slowing momentum was increasing. At the moment, the WTI is down 1.65% on the day at $44.65.

Later in the session, the IHS Markit will release the Manufacturing PMI reports from Canada and the United States. Ahead of these releases, the US Dollar Index is up 0.65% at 96.70. The next significant macroeconomic data for the pair will be Friday's employment figures from both countries. 

Technical levels to consider

1.3665 (Dec. 31, 2018, high) aligns as the first technical resistance for the pair ahead of 1.3720 (May 15, 2017, high) and 1.3770 (May 11, 2017, high). On the downside, supports are located at 1.3570 (daily low), 1.3500 (psychological level), and 1.3450 (Dec. 20, 2018, low).

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