Oil Recovery Drags USD/CAD Further Below 1.2900 Level
Tracking recovery in crude oil prices, the USD/CAD pair has now dropped back below 1.2900 handle to currently trade near day's through level at 1.2875.
Crude
oil prices are witnessing a recovery despite of the API report on
Tuesday that showed US crude stocks increased by 3.4 million barrels in
the last week. Later during NA session, EIA will release its weekly
inventories data at 02.30 GMT. With a high degree of correlation between
crude oil prices and the USD/CAD pair, and in absence of any major
economic release from the US, any further recovery in oil prices could
further support appreciation for the Canadian Dollar thus dragging the
USD/CAD pair lower.
The pair's recovery from last week's
multi-month low halted at the very important 1.3000 psychological mark,
which now seems to have turned a significant resistance as it did on the
way down, as an important support. The pair is now sustaining its
weakness below 1.2900 and hence seems vulnerable to continue drifting
lower from current levels.
Technical levels to watch
From
current levels, the pair could be headed back to a short-term
descending trend-channel resistance break-point turned support near
1.2850-45, which if broken might open room for further depreciation
towards retesting 1.2820-1.2800 handle support.
Conversely, a
move back above 1.2900 level might confront immediate resistance at
day's peak near 1.2945-50 area. Only a convincing strength back above
1.2950 resistance would provide the required momentum to lift the pair
beyond 1.3000 psychological mark resistance, towards April month daily
closing highs strong resistance near 1.3135-40 area.
