USD/CAD recovers toward mid-1.27s on crude oil sell-off
- WTI falls sharply on higher-than-expected inventory build-up in the U.S.
- USD/CAD stages a quick 20-pip recovery.
- DXY remains stuck in narrow band near 94.75.
The USD/CAD pair gained traction in the NA session and erased a portion of its daily losses as the commodity-sensitive loonie weakened on falling crude oil prices. At the moment, the pair is trading at 1.2745, still down 0.3% on the day.
EIA reports oil inventory build-up in the U.S.
According to the weekly report released by the Energy Information Administration, .commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) in the United States increased by 2.2 million barrels from the previous week, surpassing the market estimate of a 2.8 million barrels drawdown. With the initial reaction to the data, the barrel of West Texas Intermediate lost nearly 50 cents to drop to a fresh two-day low at $56.45. As of writing, the barrel of WTI was trading at ½56.60, down 1% on the day.
- WTI tumbles to lows near $56.50 on EIA
Meanwhile, the US Dollar Index is struggling to find any directional strength on the day as it remains stuck in a very tight range near the 94.75 handle, where its losing 0.06% on the day. Amid a lack of fundamental drivers in the remainder of the session, oil prices are likely to continue to drive the pair's price action.
Technical levels to consider
Despite that recent fluctuation, the pair is trading in a 40-pip range on Wednesday and the RSI indicator on the daily graph suggests a short-term neutral outlook as it moves sideways near the 50 mark. FXStreet's technical confluence indicator assigns the initial resistance for the pair at 1.2800 (10-DMA/Fibo 38.2% of 1-week range) ahead of 1.2915 (Oct. 27 high) and 1.3000 (psychological level). On the downside, supports align at 1.2720 (daily low/20-DMA), 1.2620 (Oct. 24 low) and 1.2525 (100-DMA).
- USD/CAD appears neutral near-term – Scotiabank