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USD/CAD retreats toward 1.3250 area as WTI recovers above $51

  • WTI rebounds modestly after closing in red on Monday.
  • US Dollar Index climbs toward the 96 mark.
  • Coming up: Empire State Manufacturing Index and PPI data from the U.S.

After advancing to the 1.3280 area during the European morning, the USD/CAD pair lost its traction and turned negative on the day as the commodity-related loonie gather strength on the back of a modest recovery seen in crude oil prices. As of writing, the pair was down 0.2% on the day at 1.3258.

Earlier in the day, reports of China looking to introduce stimulus measure to jump-start the economy helped crude oil reverse its course after suffering losses for two straight days. Furthermore, Saudi Arabian Energy Minister Al-Falih reassured markets that the 1.2 million bpd output cut by OPEC+ would have strong impact on the oil market to provide an additional boost. As of writing, the WTI was up 0.8% on the day at $51.15.

On the other hand, the broad-based selling pressure surrounding major European currencies such as the GBP and the EUR allowed the greenback to find demand on Monday to limit the pair's losses for the time being. Ahead of the PPI and NY Fed's Empire State Manufacturing report, the US Dollar Index adds 0.3% on the day at 95.86.

Technical levels to consider

The pair could face the initial resistance at 1.3300 (psychological level/Jan. 14 high) ahead of 1.3375 (50-DMA) and 1.3495/1.3500 (Dec. 18, 2018, high/psychological level). On the downside, supports align at 1.3255 (daily low), 1.3185/80 (Jan. 11/Jan. 9 low) and 1.3125 (Nov. 16 low).

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