USD/CAD dips below 1.34, eyes oil price action

The USD/CAD pair dipped below 1.34 in Asia as the Canadian dollar remains well bid, tracking the uptick in the oil prices.

Nears rising trend line support

The trend line sloping upwards from the Feb 16 low and April 13 low is seen offering support near 1.3382 levels. The Canadian dollar spiked in the overnight trade after the Bank of Canada kept rates unchanged as expected, but downplayed the recent miss in the inflation data. The policy statement sounded slightly hawkish and tilting towards rate hike.

The USD/CAD pair fell to 1.3404 in the overnight trade and extended losses to a 1.3397 levels in Asia. The strength in the oil benchmarks seen ahead of the OPEC also keeps the bid tone around CAD intact.

The CAD lost its charm in the first quarter of 2017, given the widening US-Canada rate differential. The bears could make a comeback if the OPEC fails to boost prices above $60 levels.

USD/CAD Technical Levels

A break below 1.3382 (rising trend line support) would open up downside towards 1.3345 (100-DMA) and 1.3294 (200-DMA). The daily RSI is sloping downwards and is yet to hit the oversold territory.

On the higher side, breach of resistance at 1.3465 (5-DMA) could yield a rally to 1.35 (zero figure) and 1.3547 (10-DMA). Only a daily close above the 10-DMA would signal short-term bearish invalidation.